Joe Georgie, owner of Georgie Manufacturing, is considering whether to produce a new product. He has considered the operations requirements for the product as well as the market potential. Joe estimates the fixed costs per year to be Php 2,000,000 and variable costs for each unit produced to be Php 2,500. (a) If Joe sells the product at a price of Php 3,500, how many units of product does he have to sell in order to break even? Use both the algebraic and graphical approaches. (b) If Joe sells 3000 units at the product price of Php 3,500, what will be his contribution to profit?
Joe Georgie, owner of Georgie Manufacturing, is considering whether to produce a new product. He has considered the operations requirements for the product as well as the market potential. Joe estimates the fixed costs per year to be Php 2,000,000 and variable costs for each unit produced to be Php 2,500. (a) If Joe sells the product at a price of Php 3,500, how many units of product does he have to sell in order to break even? Use both the algebraic and graphical approaches. (b) If Joe sells 3000 units at the product price of Php 3,500, what will be his contribution to profit?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 5EA: Shelby Industries has a capacity to produce 45.000 oak shelves per year and is currently selling...
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Question
Joe Georgie, owner of Georgie Manufacturing, is considering
whether to produce a new product. He has considered the
operations requirements for the product as well as the market
potential. Joe estimates the fixed costs per year to be Php
2,000,000 and variable costs for each unit produced to be Php
2,500.
(a) If Joe sells the product at a price of Php 3,500, how many units
of product does he have to sell in order to break even? Use both
the algebraic and graphical approaches.
(b) If Joe sells 3000 units at the product price of Php 3,500, what
will be his contribution to profit?
Transcribed Image Text:1. Joe Georgie, owner of Georgie Manufacturing, is considering
whether to produce a new product. He has considered the
operations requirements for the product as well as the market
potential. Joe estimates the fixed costs per year to be Php
2,000,000 and variable costs for each unit produced to be Php
2,500.
(a) If Joe sells the product at a price of Php 3,500, how many units
of product does he have to sell in order to break even? Use both
the algebraic and graphical approaches.
(b) If Joe sells 3000 units at the product price of Php 3,500, what
will be his contribution to profit?
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