Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 9, Problem 2.2CE
To determine
Break even unit sales volume for company.
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Students have asked these similar questions
Marginal Profit
Yaster Breakfast Supplies is planning to manufacture and market a new toaster. After conducting
extensive market surveys, the research department provides the following estimates:
• a weekly demand of 313 at a price of $13 per toaster
• a weekly demand of 202 at a price of $17 per toaster
The financial department estimates that weekly fixed costs will be $1,379 and variable costs (cost
per unit) will be $4.
Assume:
• the relationship between price and demand is linear
the cost function in linear
Use your models to predict the marginal profit when Yaster is producing and selling 261 toasters
per week. Round to the nearest cent.
$
per toaster
Pixie Arts and Graphics, a medium scale printing press business has determined the equation that
describes the relationship of the price and demand of one of its products as Price=150 - 0.01•D (D
as Demand per unit) for an annual printing of this product. The fixed costs annually = P50,000 and
the variable cost = P40 per unit.
Requirement:
a. What is the maximum profit that can be earned?
b. What is the unit price at this point of optimal demand if demand is not to be anticipated to
exceed more than 6,000 units annually?
Hint:
Profit (loss) = total revenue – total costs
= (aD – bD²) – (Cf + CyD)
Question
6. A producer can produce 2500 units of wood
parts per day at a plant located in USA.
The steady demand for wood parts is 500
units per day. The set up cost for the
equipment to the company is $ 50.00. The
annual carrying cost for the wood part is $
1.00 per unit. The facility operates 200 days a
year:
a) Calculate the optimal run size
b) Average inventory
c) Total cost of carrying + ordering per year
d) The numbers of production run per year
e) Length of a production run in days
Chapter 9 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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