b. The following are costs and revenues incurred by an ice cream company in short-run production. Fixed cost (month) : RM Rent 5 000 Interest on loan 1 200 Premium insurance 600 Variable cost (month) : Wages Maintenance 8 800 300 Utilities 2 200 Raw material 9 600 Transportation Owners salary before start producing own ice cream firm 2 000 54 000 Revenue (month): Price per one cone ice cream Operation days Average customer per day RM5 26 days 250 customers Based on the above information, calculate: i. Total revenue ii. Total cost iii. Economic profit From the answer to question (iii), what can you advise the ice cream maker?

b. The following are costs and revenues incurred by an ice cream company in short-run production. Fixed cost (month) : RM Rent 5 000 Interest on loan 1 200 Premium insurance 600 Variable cost (month) : Wages Maintenance 8 800 300 Utilities 2 200 Raw material 9 600 Transportation Owners salary before start producing own ice cream firm 2 000 54 000 Revenue (month): Price per one cone ice cream Operation days Average customer per day RM5 26 days 250 customers Based on the above information, calculate: i. Total revenue ii. Total cost iii. Economic profit From the answer to question (iii), what can you advise the ice cream maker?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 1.1CE: What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If...

See similar textbooks

Similar questions

Dana owns a building that she purchased for $600,000. Its current replacement cost is $2 million. The building is covered up to $1,000,000 for fire-related perils by ZRP Insurance Company, with an 80% coinsurance provision and a $2,000 deductible. Last week, a fire broke out in the building, causing $900,000 in covered damage. What will ZRP Insurance Company pay for this loss? A)$562,500 B)$560,500 C)$718,000 D)$700,000
Q2) One of the energy companies incurred miscellaneous costs and a group of engineers analyzed the costs according to the long-term investment contract. Answer the following points based on the above situation: A) How would you classify these possible costs based on line of your study that will be included in each annual economic assessment. Within short clarification for each possible costs that you suppose to mentione it? B) Give an simple example about each costs-line. C) How will the level of revenue be determined economically? Clarify this statement?
[1] A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $35.00; variable cost per unit is $15.00; fixed costs are $8200.00; and capacity per period is 740 units. a) Calculate the break-even point (i) in units (ii) in dollars (iii) as a percent of capacity b) Draw a detailed break-even chart. c) Calculate the break-even point (in units) if fixed costs are reduced to $7000.00 d) Calculate the break-even point (in dollars) if the selling price is increased to $40.00 ANSWER WITH PROPER SOLUTIONS PLEASE
Felde Company had $150,000 of net income in 2011 when the s4elling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000.Management expects per unit data and total fixed costs to remain the same in 2012. The president of Felde Company is under pressure from stockholders to increase netincome by $60,000 in 2012. Instructions (a) Compute the number of units sold in 2011. (b) Compute the number of units that would have to be sold in 2012 to reach the stockholders’ desired profit level.
1. Direct laborrate: $15.00perhour Production material: $375 per 100 items Factory overhead: 125% of direct labor Packing costs: 75%ofdirectlabor Desiredproﬁt: 20%oftotalmanufacturing cost use the above information to answer how many units must be sold to achieve a proﬁt of $25,000? [Note that the units sold must account for total production costs (direct and overhead) plus desired proﬁt. 2. A small textile plant was constructed in 2004. The major equipment, costs, and factors are shown below. Estimate the cost to build a new plant in 2014 if the index for this type of equipment has increased at an average rate of 12% per year for the past 10 years. Show work and Select the closest answer. a) $4,618,000 b) $10,623,000 c) $14,342,000 d) $ 14,891,000
It’s time to get a new laptop that is $2500. If you finance it, you will be charged 8% annual interest and it will take you two years to pay it off, paying each month. (A)How much will you pay each month for this laptop? (B)What are your total acquisition costs of financing the laptop?
Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? iii. What will be the market value of merged company (Cfood after the acquition of Tfood) under the cash offer?
Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? v. What is the cost of merger under stock offering? Also compute the merger's NPV for Cfood's original shareholders. i. What is the economic gain from the merger? ii. What…
Richie Rich has applied for a home equity loan. The bank on its part has estimated the market value of Richie's property at $750,000. If the amount of existing mortgage loan on the property is $500,000 and the bank lends only up to 70 percent of the borrowing base, what is the maximum amount of loan will Richard get? a.$175,000 b.$750,000 c.$100,000 d.$250,000
5. A company has a production capacity of 500 units per month per month and its fixed costs are P250,000 a month. The variable costs per unit are P1,150 and each unit can be sold for P2,000. Economy measures are instituted to reduce the fixed costs by 10 percent and the variable costs by 20 percent. Determine the old and the new break even points. What are the old and the new profit at 100 percent capacity?
The Lombard Company produces and sells office-space dehumidifiers to companies that own or rent office space. (Can you provide answer to D ONLY.) (a) Lombard’s materials and labor costs for producing the dehumidifiers are $3,000 per unit and the fixed costs of its dehumidifier production plant are $1.85 million. If Lombard sells a dehumidifier for $5,000 per unit, what is its percent contribution margin? Show your work. (b) If Lombard used revenue-based compensation to pay its sales force, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a price of $4,500? Show your work. (c) If Lombard used the profit-based compensation method described in the course to pay its sales force and sets the dehumidifier’s target price at $5,000 per unit, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a price of $4,500? Show your work. (d) Explain the benefit to Lombard’s management of using the profit-based compensation method of Part (c)…
Upon graduating with an accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually. annual operating profit? A) -$10,000. B) $40,000. C) $70,000. D) $80,000.