Concept explainers
a.
To calculate: The break even quantity using both graphic and algebraic approaches.
Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.
b.
To calculate: The reduction in variable cost if sales were not expected to increase.
Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.
c.
To calculate: The increase in sales if it is not enough for break even.
Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.
d.
To calculate: The profits if sales can be increased by 30% or variable cost an be reduced by 85%..
Concept Introduction: Profit is explained as surplus of total income over total costs.
e.
To calculate: The percent change in the per unit profit contribution generated in part (d).
Concept Introduction: Profit is explained as surplus of total income over total costs.
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Chapter A Solutions
OPERATIONS MANAGEMENT CUSTOM ACCESS
- 1. A toy manufacturer sells a doll for 21 dollars. Variable cost is $1.20 per doll and marketing spending is $5 a year. Attrition is 0.5% per month. At a monthly discount of 1%, what is the CLV? Explain the meaning of the CLV result. Enter response to the first questionarrow_forwardVVH Training is a company that provides expert training sessions on how to run your business and make it profitable. They offer these training sessions in their offices and offer catering services during the sessions.You have been hired to complete a profitability analysis and you decided to start by completing a cost analysis of the business, in order to figure out for each training sessions, what costs are fixed and what costs are variable.You were able to gather the following information about the associated costs: • Instructor: $11,000 per session • Training Material: $2,500 per session and $35 per attendee • Catering Services:• Food: $75 per attendee • Setup/cleanup: $25 per attendee• Fixed fee: $5,000 per training session The catering company has also offered VVH Training a 1,000$ discount per session, if they are willing to leave their brochures on the dinner table as a form of advertising. VVH has accepted the offer saying that it is a no-brainerRequired:1. plot a graph that…arrow_forward3. Companies such as Johnson and Johnson are in a more advantaged position because they have the product knowledge and thus, consumers must rely on them for accurate information about product safety, usage, and effectiveness. Given this situation, companies have a duty to take special care to ensure that consumers' interests are not harmed by the products that they offer them. Discuss what can Johnson and Johnson do in design, production, and marketing to ensure that the above is achieved. Only typing answer Please explain step by steparrow_forward
- The management of Magic Vision would like to have an efficient supply chain for their high-end eyewear, but unfortunately, they are not satisfied with the performance of their marketing intermediaries in promoting the product. The company decided to sell its products only through its own efforts since its objective is to reach the target sales for the year. Do you think that the owner's decision is an effective strategy? If yes or no, justify your answer.arrow_forwardSuppose that you have a service business such as house painting. Describe how you would use cost-plus pricing in developing an estimate for a potential customer.arrow_forwarda business man offers 3 lines of product , A B & C Before the pandemic all is well with the business. As the pandemic rises throughout the country, the businessmen notice that off the 3 products, 2 of them decreases in sales and still continues up to present. The product that is still salable in the market tends to have sales, but not as much as before the pandemic. if you will be asked how will you handle the business where the 2 other products would still be available?arrow_forward
- How would you expect this situation to affect the assessment of Eastern’s financial condition and performance? Although nonquantitative factors may be relevant to a company’s financial evaluation in general terms, the details of this specific situation are not relevant to the firm’s financial condition or performance. Its one-product strategy increases Eastern’s efficiency and will ensure its long-term financial success. Although its profits are declining now, these efficiencies will ensure the company’s long-term success. Eastern’s profits will continue to decline, and the company’s survival is in jeopardy if it does not create a new product with more potential for market growth.arrow_forwardFor Mother’s Day, the handbag buyer planned a point-of-sale promotion at 25% off for straw handbags. Here is a record of what sold during the promotion: 100 handbags with an original retail of $49.00 200 handbags with an original retail of $39.00 Calculate the following: Total markdown in dollars for the promotion. Total sales generated for the Mother’s Day event. Total markdown percentage for the Mother’s Day sale event.arrow_forwardProduct: Little Caesars (regular pepperoni pizza) Answer the following questions in relation to the chosen product. a) What is the real need for this product/service? b) What is its approximate price? c) What do you consider to be the appropriate income level of the target population for this product/service?arrow_forward
- You are given the following information about the sales and inventory levels for your company for the last five years. Using regression analysis, determine what the level of safety stocks for your company appears to be. Year 1 2 3 4 5 Inventory $5,112,930 $5,921,310 $6,447,375 $7,355,880 $43,281,300 $8,067,195 Sales $23,586,200 $28,975,400 $32.482.500 $38,539,200 O $1.525,000 $1,475,000 O $1,500,000 O $1,550,000 O $1,575,000arrow_forwardMavis and John have joined forces to start M&J Food Products, a processor of packaged shredded lettuce for institutional use. John has years of food processing experience, and Mavis has extensive commercial food preparation experience. The process will consist of opening crates of lettuce and then sorting, washing, slicing, preserving, and finally packaging the prepared lettuce. Together, with help from vendors, they think they can adequately estimate demand, fixed costs, revenues, and variable cost per 5-pound bag of lettuce. They think a largely manual process will have monthly fixed cost of $50,000and a variable cost of $2.50 per bag. They expect to sell 75,000 bags of lettuce per month. They expect to sell the shredded lettuce for $3.25 per 5-pound bag. John and Mavis has been contacted by a vendor to consider a more mechanized process. This new process will have monthly fixed cost of $125,000 per month with a variable cost of $1.75 per bag. Based on the above scenario: Should…arrow_forward6. Laura is trying to decide whether to sell her knitted hats on Etsy, at a holiday bazaar, or in a local boutique. Demand could be 0 hats/month, 10 hats/month, or 20 hats/month. Given the payoff matrix below, what is her decision under equally likely? Demand = 0 Demand = 10 Demand = 20 Etsy -$70 $80 $230 Bazaar -$60 $90 $240 Boutique -$80 $70 $220 Select one: a. Etsy and boutique. b. Etsy only. c. Etsy and bazaar. d. Bazaar and boutique. e. All 3 are equally good. f. Bazaar only. g. None of them are good options. h. Boutique only.arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
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