AMH Inc. currently sells 1,148 Class A motor homes, 2,751 Class C motor homes, and 108,438 pop- up trailers yearly. AMH is considering adding a mid-range camper and expects to sell 1,783 if launched. However, if the new camper is added, AMH expects that its Class A sales will decline to 656 units while the Class C campers will decline to 1,750. The sales of pop-ups will not be affected. Class A motor homes sell each for an average of $115,324. Class C homes are priced at $27,383, and the pop-ups sell each for $4,678. The new mid-range camper will sell for $46,299. What is the cost of erosion?
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- Purpoll Oven operates a bakery in Quezon City. Due to its delicious products andstrategic location, there is a 25% increase in their demand last year. However, their customershave not been able to buy the bread of their choice. Meanwhile, additional ovens can’t be addedto the facility due to its size. During the kaizen meeting, a staff suggested a different process toload the oven, making the process more efficient. This process will require manual loading ofbread into the oven, hence additional labor is needed. This is the only this to be changed.Assuming every employee works 192 (24 days per month, 8 hours per day) hours per monthand the bakery makes 2,000 bread per month with a labor productivity of 3.472 bread permanhour, how many workers will the bakery need to add?A publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy editing, typesetting, and so on) at $55,000, and variable costs (printing, paper, binding, shipping) at $2.30 for each book produced. With this pricing, 5671 books need to be produced and sold at $12.00 each for the publisher to break even. However, rising prices for paper require an increase in variable costs to $2.80 for each book produced. Use this information to complete parts a. through c. a. What strategies might the company use to deal with this increase in costs? Choose all that are reasonable. A. Decrease the fixed costs. B. Find different suppliers to try and lower the variable costs. C. Increase the font size of the print in the book. D. Increase the selling price of the book. b. If the company continues to sell books at $12, how many books must they now sell to make a profit? The publisher must produce and sell at…Redleaf company's market research department works on the manufacture and marketing of a winter tire for vehicles. Currently the price is 10$, and the demand is 13000 units. When the price is increased to 15$, the company expects the demand to be 8500 units (assume that price is linearly related to demand.). Company is following a make-to-order policy for their production, meaning that they make production as much as ordered from their dealers. The dealers make orders 3 times a year, on January, May and September. The company has 23 dealers, who do not have any capacity restriction on their orders. Yet, the above information is a country-wise research, and shows the aggregate demand (sum of all dealers' orders) for each price. Regardless of the production amount, the company faces with a 2170$ of administrative cost for production, in addition to 1,3 $ cost of raw materials and labour costs per each units produced. If we define price as a function of demand (P(d)) using the…
- Michael’s Lobster Food Truck has been operating for three years, but he’s yet to make a profit in the competitive food truck industry. Last year, he sold 2,500 items at an average price of $12. It costs him $9 to cover his ingredients for each item, and he also has fixed costs of $8,000 per year to cover for his truck, marketing, insurance, etc. What percentage increase in the number of units sold is required for Michael to break even?Assume a company expects to sell 6 million packages of Pop-Tarts Gone Nutty! in the first year after introduction but expects that 70 percent of those sales will come from buyers who would normally purchase existing Pop-Tart flavors (that is, cannibalized sales). The price for a package of Pop-Tarts Gone Nutty! is $1.30 and its variable cost is $0.65, when the price for a package of original Pop-Tart is $1.10 with variable cost of $0.30. Assuming the sales of regular Pop-Tarts are normally 300 million packages per year and that the company will incur an increase in fixed costs of $450,000 during the first year to launch Gone Nutty! will the new product be profitable for the company? Determine the unit contributions and the loss for every package cannibalized from the original product. (Round to the nearest cent.) Unit contribution original Pop-Tarts $ Pop-Tarts Gone Nutty! Loss for every package cannibalized SA lash adjuster keeps pressure constant on engine valves, thereby increasing fuel efficiency in automobile engines. The relationship between price (p) and monthly demand (D) for lash adjusters made by the Wicks Company is given by this equation D (1.900-py0 10 What is the demand (0) when total revenue is maximized? What important data are needed if maximum profit is desired? G The total revenue is maximized when demand is 9500 units per month (Round to the nearest whole number) Select all important data that are needed if maximum profit is desired. DA Variable cost per lash adjuster B. Fixed cost per month C. Variable cost per engine valve D. Variable cost per gallon of fuel
- A large company in the communication and publishing industry has quantified the relationship between the price of one of its products and the demand for this product as Price=160−0.02×Demand for an annual printing of this particular product. The fixed costs per year (i.e., per printing)=$47,000 and the variable cost per unit=$40. What is the maximum profit that can be achieved? What is the unit price at this point of optimal demand? Demand is not expected to be more than 4,000 units per year. The maximum profit that can be achieved is $? (Round to the nearest dollar.) The unit price at the point of optimal demand is $? per unit. ABC Company is the manufacturer of a low-noise air-purification system. Its current capacity is 10,000 units/month, but ABC received orders totaling 9,000 units each month. Currently, ABC sells its system at a price of $200 per unit, its fixed cost is $500,000/month, and its variable cost is $100/unit. Note that currently, half of ABC’s variable cost is materials, and the other half is labor cost (wages for workers). ABC wants to consider cutting its price by 10% to stimulate demand. If ABC expands its capacity, it will have to lease additional manufacturing machines, each of which will cost $20,000/month to lease and can add 1000 units to ABC’s capacity. All existing workers are already working full-time. So, if ABC expands production, ABC has to either pay existing employees for overtime (1.5 times the regular wages) or hire new workers, who are expected to be paid 90% of the hourly wage of existing workers but produce only 75% of the hourly output of existing workers. (a) What is…AMC Theaters is considering raising the price of its tickets from $10 to $13. In order to make sure that this strategy is profitable, the theater is testing a pricing increase of $1.00 throughout America. For each $1.00 increase, demand drops 5%; demand is 3500 units when the tickets are priced at $10. The theater's fixed costs are $10,000 and unit variable cost is $3. Based on this information, calculate the following: a. The price elasticity of demand. Is it elastic, inelastic, or unitary elastic? b.Calculate the demand, fixed costs, variable costs, and profit for each price (i.e = $10, $11, $12, $13). What is the most profitable selling price and what profit should the theater expect at this price?
- Payless Shoe Source sees a 35 per cent increase in sales of its athletic shoesduring a 1 week, half-price sale.Redleaf company's market research department works on the manufacture and marketing of a winter tire for vehicles. Currently the price is 10$, and the demand is 36000 units. When the price is increased to 15$, the company expects the demand to be 34000 units (assume that price is linearly related to demand.). Company is following a make-to-order policy for their production, meaning that they make production as much as ordered from their dealers. The dealers make orders 3 times a year, on January, May and September. The company has 23 dealers, who do not have any capacity restriction on their orders. Yet, the above information is a country- wise research, and shows the aggregate demand (sum of all dealers' orders) for each price. Regardless of the production amount, the company faces with a 4690$ of administrative cost for production, in addition to 1,5 $ cost of raw materials and labour costs per each units produced. Which of the following presents the correct marginal profit function,…You are the marketing manager of the Business Unit (BU) that produces polystyrene (which is an input to making lightweight rigid foam). The current Demand/Supply balance, as measured by the ICIS price, is $800 per ton of polystyrene. The BU has 2 plants and can produce a total of 1800 tons. At full capacity utilization, the BU’s average variable cost equals $1300/t and its average total cost equals $1700/t.Plant 1 has a capacity of 600 tons and a marginal cost of $900/t. Plant 2 has capacity of 1200 tons and a marginal cost of $1500/t. Due to exit of one competitor, you expect next year’s polystyrene ICIS price to increase to $1200. 1. How much volume of polystyrene do you expect to produce next year, if any? 2. What is your expected contribution margin for next year? 3. What is your expected profit for next year?