The owner of the Party City Toronto Company must decide among building a megacentre store, building 5 new stores, or leasing 10 of their locations to another company.The profit that will result from each alternative will be determined by whether materialcosts remain stable, increase moderately, or increase significantly. In the payoff tablebelow the estimated profits/losses are given in $thousands.Material CostsStableMegaCentreDecision New StoresLeasingDetermine the best decision using the Maximax decision criterion.2130ModerateIncrease18508405301050940O Decision: Mega Centre based on 2470 = max(2470,1850,1040)O Decision: Mega Centre based on 2130 = max(2130,1850,1040)Decision: Stable based on 2130 = max(2130,1050,1040)O Decision: Leasing based on 2820 = max(190,2750,2820)SignificantIncrease-2470-1501040

Material CostsStableModerate IncreaseSignificant IncreaseDecisionMega Centre2130530-2470New…

Answered: The owner of the Party City Toronto…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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6. 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.
Jordan Airline routinely overbooks its flights from Dallas to Florida. Overbooking discounted seats can be expensive because providing a bumped passenger with a last-minute flight on a competing carrier can cost $2,200. A 150-passenger jet costs about $150,000 to operate from Raleigh to Atlanta. The average ticket price is $2,000. Table. The frequency of no-shows NO-SHOWS FREQUENCY 1 15 2 10 3 10 4 5 5 5 6 5 a. how many seats should be overbooked? (show your calculations) b. Korean Airline increased the average ticket price from $2,000 to $3,000 on its Atlanta/Seoul route for the holidays. How would the increased ticket price affect the number of seats overbooked? (show your calculations)
Two items are omitted from each of the following three lists of cost of goods sold data from a manufacturing company income statement. Determine the amounts of the missing items, identifying them by letter. Finished goods Inventory,June1 $61,600 $46,200 (e) Cost of goods manufactured 329,000 (c ) 484,800 Cost of finished goods available for sales (a) $260,400 $540,000 Finished goods Inventory ,June30 72,800 61,600 (f) Cost of goods sold (b) (d) $513,600
The Batu Pahat Kayak Company has these awesome new kayaks they are going to introduce to the market. They are a new company and need help in determining pricing, costs and how many kayaks they will need to sell in a month to break even. They are looking to you to help them determine if the selling price and costs will help them to reach their goals. They give you the following information shown in Table Q4(b) to work with; COST (RM) 500 NO. ITEMS Price per kayak Variable cost per kayak Fixed cost per month 1 2 225 7,700 (i) Determine the breakeven point. Batu Pahat Kayak has a few investors who are interested in getting a return on their investment. They have talked with your supervisor, and between them all, would like to get RM 30,000 a month in profit to divide between them. Calculate how many kayaks need to be sold in order to get the investors their return. (11 (ii1) Determine how much in sales do we need.
Corral Cartage leases trucks to service its shipping contracts. Larger trucks have cheaper operating costs if there is sufficient business, but are more expensive if they are not full. CC has estimates of monthly shipping demand. What comparison method(s) would be appropriate for choosing which trucks to lease? Cevap:
Year E F G H 0 − $90 − $110 − $100 − $120 1 20 35 0 0 2 20 35 10 0 3 20 35 20 0 4 20 35 30 0 5 20 0 40 0 6 20 0 50 180 (a)Based on the payback period, which alternative is preferred? (b)Based on future worth analysis, which of the four alternatives is preferred at 5% interest? (c)Based on future worth analysis, which alternative is preferred at 20% interest? (d)At 10% interest, what is the benefit–cost ratio for Alt. G?
Dominos is planning to introduce two new pizzas (Cauliflower and Calamari). Financial data related to producing these two new pizzas are summarized in the table below. a. If these two new pizzas are sold such that the ratio of Cauliflowers over Calamaris is 4:3, what is the break-even point? b. If the product mix has changed to five Cauliflowers to five Calamaris, what would happen to the break-even point? c. In order to maximize the profit, which product mix should be pushed? d. If both pizzas must go through the same oven and there are only 30,000 oven hours available per period, which product should be pushed to market? Assume that Cauliflower pizza takes 30 minutes and Calamari pizza takes 15 minutes in the oven. Cauliflower Pizza Calamari Pizza Selling Price $10 $12 Variable Costs $5 $10 Fixed Costs $2,000 $600
A firm’s manager must decide whether to make or buy a certain item used in the production of vending machines. Making the item would involve annual lease costs of $150,000. Cost and volume estimates are as follows Make Buy Annual fixed cost $150,000 None Variable cost/unit $ 60 $ 80 Annual volume (units) 12,000 12,000 Given these numbers, should the firm buy or make this item? There is a possibility that volume could change in the future. At what volume would the manager be indifferent between making and buying?
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DECISION MATRIX. Given the data in the Table Below, you are requested to help Ms. Meticulous in deciding what firm shall she choose in order to satisfy her criteria as illustrated in the Table. Show your solution and/or justification why? Weights per criterion Criteria Supplier 1 Supplier 2 Supplier 3 based on her importance 40 % Price 8 9 10 Accessibility Customer- 50 % 7 10 10 friendly (after sales service) TОTAL 10% 10 10 9. 25 29 29
An investment proposal will have annual fixed costs of $60,000, variable costs of $35 per unit of output, and revenue of $55 per unit of output.(A) Determine the break-even quantity.(B) What volume of output will be necessary for an annual profit of $60,000?
Mary Williams, owner of Williams Products, is evaluating whether to introduce a new product line. After thinking through the production process and the costs of raw materials and new equipment, Williams estimates the variable costs of each unit produced and sold at $8 and the fixed costs per year at $70,000. If the selling price is set at $13.50, Williams forecasts that first-year sales would increase to 17,000 units. Which pricing strategy ($15.00 or $13.50) would result in the greater total contribution to profits?

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