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Define the term Break-Even Sales Volume?
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- Give an example to explain the Break-Even Analysis?A herbal tea producer company has 24 different products in the market, each are produced in one of the 3 factories owned by the company. The weights of the products in monthly sales may vary depending on time of the year (demands of certain products shift to others in each of the 4 seasons), age of the products and market conditions, but yearly aggregate demand has a very strong correlation with the price of the product (Here, we ignore any other factor and assume that the yearly aggregate demand is directly and linearly effected by the price). The company found out that when the price for a packet of 20 herbal tea bags is 10 TL, yearly demand is 337500 packets. When the price increases to 11 TL, demand decreases to 337125 packets. On the cost side, the company has 1200000 TL of yearly administrative costs regardless of the price or the number of units sold, including the rents, depreciation of the buildings and other related assets and salaries of 58 workers (average monthly salary…Johnny's company provides a on-call service to provide garden maintenance / tidying services in several residential areas at a regular price of $ 400, covering maintenance / trimming and spraying of fertilizers and chemical pests. In an effort to attract new customers, the company offered its customers a $ 80 discount off the regular price. It turned out that this decision was greeted enthusiastically and customers increased to 5,500 units (packages) from 3500 units recorded in the same period last year. Question: a. Compute: Arc price elasticity of demand for service company “ABC”. b. It is assumed that the Arc price elasticity in item a is the best available estimate of the Point price elasticity of demand. If the marginal cost is $ 150 per unit for labor and materials. Compute: Optimal mark-up on price, and Optimal price for Johnny's company services.
- Many times, the selling price of a product, p, is related to the demand, D, according to the relationship p=a-bD. However, a company has found that the price of their product can be related to demand ( in units per year) according to the following equation: p= $88.5 – (0.5)D0.5 . In addition, there is a fixed cost of $20,000 per year and the variable cost to manufacture the product is $20 per unit. a. What level of demand maximizes total revenue and the maximum revenue? b. What level of demand maximizes total profit for this product and the maximum profit?Redleaf company's market research department works on the manufacture and marketing of a winter tire for vehicles. Currently the price is 10$, and the demand is 13000 units. When the price is increased to 15$, the company expects the demand to be 8500 units (assume that price is linearly related to demand.). Company is following a make-to-order policy for their production, meaning that they make production as much as ordered from their dealers. The dealers make orders 3 times a year, on January, May and September. The company has 23 dealers, who do not have any capacity restriction on their orders. Yet, the above information is a country-wise research, and shows the aggregate demand (sum of all dealers' orders) for each price. Regardless of the production amount, the company faces with a 2170$ of administrative cost for production, in addition to 1,3 $ cost of raw materials and labour costs per each units produced. If we define price as a function of demand (P(d)) using the…what parameters are necessary to find break-even point?
- Philips Inc is considering investing in a new project and to estimate the consumer demand they hired a marketing consulting team. The consulting team concluded that the project is viable if the discount rate is smaller than 20%. How would you classify the cost of this marketing study? Group of answer choices Cost of debt Erosion cost Opportunity cost Sunk cost Correct answer is not availableApple wants to launch a new product. it is observed that the fixed cost of the new product is $35,000 and the variable cost per unit is $500. The revenue function for the sale of D unit is 5000D-100 D2. The company's break even points areDoCoMo - The Japanese Wireless Telecom Leader: The Tsunami in Trouble In May 2002, NTT DoCoMo (DoCoMo) Inc., Japan's largest mobile phone company, announced a net loss of ¥ 116.19 billion1 and a goodwill write-off of ¥ 624.6 billion for the fiscal ending March 2002. Though the company registered an increase in operating revenues from ¥ 4,669.37 billion in 2000-01 to ¥ 5167.14 billion, the revenue growth was stated to be well below its company expectations. Company sources attributed this to the general decline in Average Revenue Per User (ARPU) for voice services and slower growth in new cellular subscribers across the country (Refer Exhibit I for DoCoMo's financials and ARPU data). DoCoMo's announcement did not come as a major surprise to industry observers, as media reports had been forecasting losses for the company since early 2002 itself. What was noteworthy about this development, however, was the fact that the company was largely believed to be performing exceptionally well in…
- All drop downs are (a,b,c,d)You are hired as a consultant at a revenue management firm and one of ourrecent clients wished to determine the optimum price for their consumer electronics product.The cost of the product is $100 and before retaining us, they had been selling the product at$200 because it felt like a nice round number. The current sales volume is 1000 units peryear. We examined the market preferences and buying behavior, and concluded that thiscompany’s marketplace has a price elasticity of 1 (i.e. Assume that an x% change in pricewill result in an x% change in sales volume for any x). What is the optimal price thatmaximizes total profit for this company? What are the sales volume, total revenue and totalprofit at the optimal price?ABC Co. manufactures a subcomponent at the rate of 400 per day when required. Its annual demand for this item is 50,000 units. Assume 250 working days per year. Holding cost is $10 per unit per year. Set-up cost is 600 per set-up. Find: a) Economic production quantity. b) How many production runs will be made per year. c) What will be the maximum inventory level?