FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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A "What-If" analysis:
An electronics store sells two models of television. The sales of these two models, X
and Y, are dependent, that is, if the price of one increases, the demand for the other
increases. A study is made to find the relationship between the demand (D) and the
price (P) in order to maximize the revenue from these products. The study resulted in
the following two equations:
Dx = 476 - 0.54 Px+ 0.22 Py
Dy = 601 + 0.12 Px - 0.54 PY
These equations can be implemented in Excel as following:
TV X price
TVY price
100
100
=476-
0.54*B1+0.22*B2
=601+0.12*B1-
0.54*B2
=B1*B3+B2*B4
Demand X
Demand Y
Revenue
Copy-and-paste, or type, the Excel information given above into cells A1:B5 of an
Excel spreadsheet.
Develop a two-way data table to estimate the optimal prices of each of the two
products in order to maximize the total revenue. Vary the price of each product from
600 to 1000 in increments of 50.
TV X price
A TV Y price
expand button
Transcribed Image Text:A "What-If" analysis: An electronics store sells two models of television. The sales of these two models, X and Y, are dependent, that is, if the price of one increases, the demand for the other increases. A study is made to find the relationship between the demand (D) and the price (P) in order to maximize the revenue from these products. The study resulted in the following two equations: Dx = 476 - 0.54 Px+ 0.22 Py Dy = 601 + 0.12 Px - 0.54 PY These equations can be implemented in Excel as following: TV X price TVY price 100 100 =476- 0.54*B1+0.22*B2 =601+0.12*B1- 0.54*B2 =B1*B3+B2*B4 Demand X Demand Y Revenue Copy-and-paste, or type, the Excel information given above into cells A1:B5 of an Excel spreadsheet. Develop a two-way data table to estimate the optimal prices of each of the two products in order to maximize the total revenue. Vary the price of each product from 600 to 1000 in increments of 50. TV X price A TV Y price
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