A manufacturer assembles personal computers. If the computers are priced at £1,000 each, the company will sell 30 units per week, and if the computers are priced at £800 each the sales will be 50 units per week. The fixed weekly costs are £10,000 per week and the variable costs are £600 per unit sold. Assuming that there is a linear relation between sold items and their prices, determine: 1) The price function ( 2) The weekly revenue functiofi, and the cost function. ( 3) The manufacturer's weekly profit function. (..

A manufacturer assembles personal computers. If the computers are priced at £1,000 each, the company will sell 30 units per week, and if the computers are priced at £800 each the sales will be 50 units per week. The fixed weekly costs are £10,000 per week and the variable costs are £600 per unit sold. Assuming that there is a linear relation between sold items and their prices, determine: 1) The price function ( 2) The weekly revenue functiofi, and the cost function. ( 3) The manufacturer's weekly profit function. (..

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 4MC

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1-18 Katherine D’Ann is planning to finance her college education by selling programs at the football games for State University. There is a fixed cost of $400 for printing these programs, and the variable cost is $3. There is also a $1,000 fee that is paid to the university for the right to sell these programs. If Katherine was able to sell programs for $5 each, how many would she have to sell in order to break even?
FG Manufacturers wants to determine the effectiveness of their pricing decisions for their product Lylo. As a consultant, you have been asked to develop cost functions that will assist in arriving at the optimal price that will enable the company to maximize profits. During the year, you were provided with the following demand and costs functions for the product: P = 400 – 6Q; where P is the unit selling price and Q is quantity in thousands of units. TC = 8Q2 + 36Q + 150; where TC is total cost in thousands of dollars. Determine the optimal sales revenue. Calculate the maximum profit. Briefly outline two (2) factors to be considered by managementswhen pricing decisions are being made.
A company estimated that the relationship between the unit price and demand per month for a potential new product is approximated by P = $ 100 – $ 0.1D. The company can produce the product by increasing fixed costs $ 17,500 per month, and the estimated variable costs is $ 40 per unit. What is the optimal demand, D*, and based on this demand, should the company produce new product? Why? a) Work out the complete solution by differential calculus, starting with formula for profit or loss per month b) Solve graphically for an approximate answer
Round off your final answer to whole #. A company produces and sells a consumer product and is able to control the demand by varying the selling price. The approximate relationship between price and demand is p=45 + 2700/D - 5000/D2 for D > 1 The company is seeking to maximize its profit. The fixed cost is $1,000 and the variable cost is $38 per unit. What is the number of units that should be produced and sold each month to maximize profit?
Please answer with details on how to do it. A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price demand relationship for this product is P = -0.25D + 250, where P is the unit sales price of the product and D is the annual demand. Total cost = fixed cost + Variable cost, TC = CF + CV Revenue = Demand x Price, TR = D x P Profit = Total Revenue – Total Cost, P = TR – TC a) Develop the equations for the total cost and total revenue. Find the breakeven quantity c) How many units must be sold to maximize profit? What is the company’s maximum profit?
Problem 2 Refer to problem 1.(Problem 1: Auto Mart is a mythical seller of a variety of automobileparts and accessories. Auto Mart's owner, Jonathan Trott, wishes to determine the optimum order quantity for oneof the store's popular wiper blades. The annual demandfor the wiper blades is 16,000. The annual holding costper unit is US$2.50, and the cost to place an order is US$50:) Assuming that holding costs and ordercosts remain the same, if annual demand for wiper blades doubles to 32,000, does the EOQ also Double? Explainyour answer with relevant calculations.
The durax tire company recaps tires. The weekly fixed cost is $2500 and the variable cost per tire is $9. Price is related to demand, according to the following linear equation: V = 200 - 4.75p Develop the nonlinear profit function for the tire company and determine the optimal price, the optimal value, and the maximum profit per week.
The total cost of an MBF plant is 35,000 units if it produces 500 products, and a total cost of 60,000 units if it produces 1,000 units of the same product. If each number of products is sold at a price of 100 monetary units, it is recommended: a. Draw a diagram to determine its breaking point. B. If we want to make a profit of 20,000 units by selling 1,500 products, what is the variable cost? P(Profit) = pQ-(F+vQ) TR=pQ Q=F/(p_v) TC=F+vQ
1-25 Zoe Garcia is the manager of a small office-support business that supplies copying, binding, and other services for local companies. Zoe must replace a worn-out copy machine that is used for black-and-white copying. Two machines are being considered, and each of these has a monthly lease cost plus a cost for each page that is copied. Machine 1 has a monthly lease cost of $600, and there is a cost of $0.010 per page copied. Machine 2 has a monthly lease cost of $400, and there is a cost of $0.015 per page copied. Customers are charged $0.05 per page for copies. (a) What is the break-even point for each machine? (b) If Zoe expects to make 10,000 copies per month, what would be the cost for each machine?
1-25 Zoe Garcia is the manager of a small office-support business that supplies copying, binding, and other services for local companies. Zoe must replace a worn-out copy machine that is used for black-and-white copying. Two machines are being considered, and each of these has a monthly lease cost plus a cost for each page that is copied. Machine 1 has a monthly lease cost of $600, and there is a cost of $0.010 per page copied. Machine 2 has a monthly lease cost of $400, and there is a cost of $0.015 per page copied. Customers are charged $0.05 per page for copies. (c) If Zoe expects to make 30,000 copies per month, what would be the cost for each machine? (d) At what volume (the number of copies) would the two machines have the same monthly cost? What would the total revenue be for this number of copies?
1-23 Golden Age Retirement Planners specializes in providing financial advice for people planning for a comfortable retirement. The company offers seminars on the important topic of retirement planning. For a typical seminar, the room rental at a hotel is $1,000, and the cost of advertising and other incidentals is about $10,000 per seminar. The cost of the materials and special gifts for each attendee is $60 per person attending the seminar. The company charges $250 per person to attend the seminar, as this seems to be competitive with other companies in the same business. a.How many people must attend each seminar for Golden Age to break even? b.If 75 people were to attend, has the company made a profit or loss? (show your work and highlight the answer).
. The cost of a window air conditioner was $350. During a spring promotion, the selling price was reduced by $150. The required overhead expenses and operating profit for the air conditioner are 25% and 15% of selling price respectively. a) What is the regular selling price? b) What is the break-even price? c) What is the profit (loss) at the sale price? 3. Frigid Boards purchases one of its snowboards for $395 less a retail trade discount of 15% and a loyalty discount of 4%. Its markup on selling price percentage on all snowboards is 21%. At the end of the season, any leftover snowboards are marked down by 10%. What is the sale price of snowboard?