As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected: Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000 Variable cost per occupied room per night $ 20 Revenue per occupied room per night $ 75 Question: Suppose 5 rooms can be sold per night, how much they should charge per night in order to break even?
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- As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected:
Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000
Variable cost per occupied room per night $ 20
Revenue per occupied room per night $ 75
Question: Suppose 5 rooms can be sold per night, how much they should charge per night in order to break even?
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- Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Machine A Machine B Original Cost $15,000 $24,000 Labor per year $2,400 $4,800 Maintenance per year $4,300 $1,000 Salvage value $2,400 $7,200 He is told to assume that: 1. The life of each machine is 3 years. 2. The company thinks it knows how to make 14% on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine A=$nothing (round your response to the nearest whole number and include a minus sign if necessary).Janelle Heinke, the owners of Ha'Peppas, is consid-ering a new oven in which to bake the firm's signature dish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $20,000 and the vari-able costs are $2.00 per pizza. Oven B is larger and can handle 40 pizzas an hour. The fixed costs associated with oven B are $30,000 and the variable costs are $1.25 per pizza. The pizzas sell for $14 each. a) What is the break-even point for each oven? b) If the owner expects to sell 9,000 pizzas, which oven should she purchase? c)If the owner expects to sell 12,000 pizzas, which oven should she purchase? d) At what volume should Janelle switch ovens?Neptune Company has developed a small inflatable toy that it is anxious to introduce to its customers. The company’s Marketing Department estimates that demand for the new toy will range between 15,000 units and 30,000 units per month. The new toy will sell for $9.00 per unit. Enough capacity exists in the company’s plant to produce 20,000 units of the toy each month. Variable expenses to manufacture and sell one unit would be $5.00 , and incremental fixed expenses associated with the toy would total $34,000 per month. Neptune has also identified an outside supplier who could produce the toy for a price of $4.00 per unit plus a fixed fee of $47,000 per month for any production volume up to 20,000 units. For a production volume between 20,001 and 45,000 units the fixed fee would increase to a total of $94,000 per month. Required: 1. Calculate the break-even point in unit sales assuming that Neptune does not hire the outside supplier. 2. How much profit with Neptune earn assuming: a. It…
- A real estate agent is considering changing her cell phone plan. There are three plans to choosefrom, all of which involve a monthly service charge of $20. Plan A has a cost of $.45 a minute fordaytime calls and $.20 a minute for evening calls. Plan B has a charge of $.55 a minute for daytime calls and $.15 a minute for evening calls. Plan C has a flat rate of $80 with 200 minutes ofcalls allowed per month and a charge of $.40 per minute beyond that, day or evening.a. Determine the total charge under each plan for this case: 120 minutes of day calls and 40 minutes of evening calls in a month.Janelle Heinke, the owner of Ha'Peppas!, is consideringa new oven in which to bake the firm's signature dish, vegetarianpizza. Oven type A can handle 20 pizzas an hour. The fixedcosts associated with oven A are $20,000 and the variable costsare $2.00 per pizza. Oven B is larger and can handle 40 pizzas anhour. The fixed costs associated with oven B are $30,000 and thevariable costs areS 1.25 per pizza. The pizzas sell for S 14 each.a) What is the break-even point for each oven?b) If the owner expects to sell9,000 pizzas, which oven should shepurchase?James Lawson's Bed and Breakfast, in a small historicMississippi town, must decide how to subdivide (remodel) the largeold home that will become its inn . There are three alternatives:Option A would modernize all baths and combine rooms, leavingthe inn with four suites, each suitable for two to four adults.Option B would modernize only the second floor; the results wouldbe six suites, four for two to four adults, two for two adults only.Option C (the status quo option) leaves all walls intact. In this case,there are eight rooms available, but only two are suitable for fouradults, and four rooms will not have private baths. The details ofprofit and demand patterns that will accompany each option are: Which option has the highest expected monetary value?
- a) For an upcoming red carpet evening, a company is selling tickets at $60 per person at a large theatre which has a capacity of 10,000 people. Each attendant is expected to buy $12 of food and merchandise at the film evening. The cost of providing the food and merchandise is estimated to be $5 per person. All other ancillary services will be provided by the theatre. Initial analysis indicates that the ancillary cost of providing food and merchandise, as well as the staff needed to handle ticket sales, may be described as a semi-variable cost. Data on these costs and tickets sold from three similar events held at the venue have been collected and are tabulated below: Tickets Sold Cost ($) 2100 6640 3824 11284 4650 13525 Use the high-low method to estimate the total cost function relating to these ancillary costs. b) The company will be renting the theatre which will host the upcoming red carpet evening. The budgeted fixed cost of both renting the theatre and paying the…1: Suppose the company has identified the following three possible demand scenarios: Demand (Units per year) Probability 25,000 0.3 60,000 0.4 100,000 0.3 1. If the capacity is set at 80,000, how much of a capacity cushion is here? What is the capacity utilization? 2. What is the probability of idle capacity if the capacity is 80,000? 3. If it costs $25 per units lost business and $50 to build a unit of capacity, how much capacity should be built to minimize total cost?Janelle Heinke, the owner of Ha’Peppas!, is consider-ing a new oven in which to bake the firm’s signature dish, vegetar-ian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $20,000 and the variable costsare $2.00 per pizza. Oven B is larger and can handle 40 pizzas anhour. The fixed costs associated with oven B are $30,000 and thevariable costs are $1.25 per pizza. The pizzas sell for $14 each.a) What is the break-even point for each oven?b) If the owner expects to sell 9,000 pizzas, which oven should shepurchase? c) If the owner expects to sell 12,000 pizzas, which oven shouldshe purchase?d) At what volume should Janelle switch ovens?
- An airline company must plan its fleet capacity and long-term schedule of aircraft usage. For oneflight segment, the average number of customers per day is 70, which represents a 65 percentageutilization rate of the equipment assigned to the flight segment. If demand is expected toincrease to 84 customers for this flight segment in three years, and management requires acapacity cushion of 25 percent, calculate the following: i. the planned capacity requirement. ii. the maximum number of customers the flight segment can accommodate.iii. the efficiency rate of the flight segment assuming that the current effective capacity of theflight segment is 93 customers.In considering a capacity expansion, we have two alternatives. The first alternative is expected to cost $1,000,000 and has an expected profit of $500,000 over the next three years. The second alternative has an expected cost of $800,000 and an expected profit of $450,000 over the next three years. Which alternative should we select, and what is the expected value of the expansion? Assume a 10 percent interest rate.8. Janelle Heinke, the owner of Ha'Peppas!, is considering a new oven in which to bake the firm's signature dish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $20,000 and the variable costs are $3.00 per pizza. Oven B is larger and can handle 40 pizzas an hour. The fixed costs associated with oven B are $32,500 and the variable costs are $1.50 per pizza. The pizzas sell for $15.00 each. Part 2 a) The break-even point in units for oven type A = _______units (round your response to the nearest whole number). b) What is the break-even point for each oven? c) If the owner expects to sell 9,000 pizzas, which oven should she purchase? d) If the owner expects to sell 12,000 pizzas, which oven should she purchase? e) At what volume should Janelle switch ovens?