Showthestepbystepsolutions tothefollowingquestions:
1. Afirmis abletosell10,000units at$
12 perpiece.Thecompanyfixed
costis$30,000.Variablecostis
$6 perunit.
a.
Whatis thecontributionperunit?
b.
Whatis
the
breakeven
salesin$?What isthe breakeven
salein
units?
c.
What isthe
markup
on sales price?Whatisthe
markup on totalcost?
Theyraise
theprice
to$15and demand dropsto
8000.
d. Calculatethe
price elasticity.
e.
Whatis thenewmarkup (profitmargin %)onthesales price
($15)?What isthenewmarkup
(profitmargin %) ontotalcost?
f.
Please calculatethetotalprofitforthis companyas
wellasthe
profitpereachtoysold. Aretheybetteroff raisingthe price?
2.
Afirmis
abletosell10,000 units.The companyfixed costis $10,000.Variablecostis$6perunit.Contribution margin (CM) is $4.
a.
Whatis the
markup
(profitmargin %)
on sales price?What isthe
markup on totalcost(profitmargin
%)?
b. If the
price elasticityofdemand is2, howmanyunitstheycan selliftheydroptheSPby$2.
c.
Whatis thenewmarkup
on sales price?Whatis the newmarkup on totalcost?
(Hint:usethenewsales)
d.
Please calculate thetotalprofitforthis companyas wellasthe profitpereachtoysold(Hint:use the
new demand)
3.
Acompany manufacturingcars
has a fixedcostof$100,000.Variablecost is$6
percar.
Sellingpriceis$10per car.
Companytargetprofit is $120,000.
a.
Howmanycarsshould
be sold to
reachthetargetprofit?
b.
Thecompanyfoundthatitsvariablecostis
goingtoincrease
by$2 and plans to raise its
sellingprice
by$3andreduced thefixedcostsby$20,000.
Howmany
more(less)cars have
tobe soldatthe newprice to reach
thetargetprofitof$120,000?
c.
What isthe
markup (profitmargin
%) on sales
price
at
thisnewsales
volume? Whatisthe markup
(profit margin %)on
totalcost?
4. Markis developinga
business planforstartingPizza
business inWaltham.
Markspecializes
in pepperonipizza.
Based onthesecondarydata he has
found out that there
are20,000familiesintheareaandabout20%of these
families are
strictvegetarians.
He believes thathe
canget10%of the marketshare ofthe
potentialcustomers.
Hisresearchreveals
anaverage familyconsumes 10pizzas
peryear.
Itcosts
atotalof$ 6to
make
a Pepperonipizza.Markisplanningtointroduce hisPepperonipizza
at$ 8andraise the price by$2 inthe
second year. Price elasticityofdemand forpizza
is0.50
a.
Estimatethedemand forMark’s
pizza in the firstyear
b. Calculatethe%markup (profitmargin %)on sales
price andtotalcost inthefirstyear
b. Estimatethedemand
forPizza in the
second
yearwiththe newprice.
d. Calculatethe%markup
on sales price
andtotalcost inthe
second year
5.
NYUis planningto
replacethe centralA/Csystemforthe
classrooms.In
response totheirrequestforproposal,
NYUreceived two proposals.
Thedetails
ofthe
proposalare
given below.
|
CompanyA |
CompanyC |
|
|
A/Csystemcostincludinginstallation$ |
35,000 |
45,000 |
|
Lifeinyears |
10 |
10 |
|
Insuranceper |
900 |
1,200 |
|
Electricitychargepermonth$ |
800 |
450 |
|
Maintenancechargesperquarter $ |
350 |
300 |
|
SystemOverhaul-numberperyear |
4 |
3intwoyears |
|
MaterialCostperoverhaul |
1,000 |
400 |
|
Numberoflaborhoursperoverhaul |
8 |
3 |
|
Laborrateforoverhaul $/hour |
100 |
100 |
UselifecyclecoststorecommendasystemforNYU.Showthecalculationstosupportyour
recommendations.
