A business encountered the following problem while choosing between alternative locations X and Y. The total fixed costs of X and Y places are 100,000 TL and 200,000 TL, respectively. The unit variable costs are 5 and 7 TL for X and Y location, respectively. The selling price at X site is 10 TL. What should be the selling price of the product in place Y if it is desired that the transition to profitability is in question at the same production amount in both places?

A business encountered the following problem while choosing between alternative locations X and Y. The total fixed costs of X and Y places are 100,000 TL and 200,000 TL, respectively. The unit variable costs are 5 and 7 TL for X and Y location, respectively. The selling price at X site is 10 TL. What should be the selling price of the product in place Y if it is desired that the transition to profitability is in question at the same production amount in both places?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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Company XYZ sells two products: AAA and BBB. Product BBB has a lower selling price but higher contribution margin compared to product AAA. Assume that the factory has fixed production capacity. If Company XYZ decided to produce and sell more units of product BBB compared to product AAA, which one of the following is likely to happen? Select one: O a. Total profits will remain the same O b. Total profits will decrease O c. Total profit will increase O d. None of the given answers O e. Total sales will increase
Consider two different cost structures for the same firm. The first has higher variable costs per unit (V=56) but lower fixed cost (F=2,107). If the firm invests in a labor saving machine the cost structure will tip towards fixed costs with variable cost per unit V34 and fixed costs Fa3,582. The selling price is the same for both scenarios P=100) and the current level of production is 80. Calculate the profit under each soenario and how that changes as unit sales increase to 100; also, as they decrease to 60. What is the percent change in profits from 80 units to 100 units under the scenario with higher variable costs?
Describe how the break-even point would be affected in each of the following scenarios: Decrease in variable costs per kilogram of meat for a butchery due to purchasing from a cheaper supplier. Increase in the selling price of peaches while the variable cost per unit remains unchanged. Increase in fixed costs due to rent adjustment and depreciation attributed to additional capital investment.
As a manager, you have to choose between two options for new production equipment. Machine A will increase fixed costs by a substantial margin but will produce greater sales volume at the current price. Machine B will only slightly increase fixed costs but will produce considerable savings on variable cost per unit. No additional sales are anticipated if Machine B is selected. What are the relative merits of both machines, and how could you go about analyzing which machine is the better investment for the company in terms of both net operating income and break-even?
Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
The profit function for two products is: Profit3x12+42x13x22+48x2+700, where x1 represents units of production of product 1, and x2 represents units of production of product 2. Producing one unit of product 1 requires 4 labor-hours, and producing one unit of product 2 requires 6 labor-hours. Currently, 24 labor-hours are available. The cost of labor-hours is already factored into the profit function, but it is possible to schedule overtime at a premium of 5 per hour. a. Formulate an optimization problem that can be used to find the optimal production quantity of products 1 and 2 and the optimal number of overtime hours to schedule. b. Solve the optimization model you formulated in part (a). How much should be produced and how many overtime hours should be scheduled?
The management of Hartman Company is trying to determine the amount of each of two products to produce over the coming planning period. The following information concerns labor availability, labor utilization, and product profitability: a. Develop a linear programming model of the Hartman Company problem. Solve the model to determine the optimal production quantities of products 1 and 2. b. In computing the profit contribution per unit, management does not deduct labor costs because they are considered fixed for the upcoming planning period. However, suppose that overtime can be scheduled in some of the departments. Which departments would you recommend scheduling for overtime? How much would you be willing to pay per hour of overtime in each department? c. Suppose that 10, 6, and 8 hours of overtime may be scheduled in departments A, B, and C, respectively. The cost per hour of overtime is 18 in department A, 22.50 in department B, and 12 in department C. Formulate a linear programming model that can be used to determine the optimal production quantities if overtime is made available. What are the optimal production quantities, and what is the revised total contribution to profit? How much overtime do you recommend using in each department? What is the increase in the total contribution to profit if overtime is used?
If the incremental cost of producing an item in the short run is less than the outsourcing price, the firm should consider producing it in-house. Select one: True O False
An automated turning machine is the current constraint at Jordison Corporation. Three products use this constrained resource. Data concerning those products appear below: Selling price per unit Variable cost per unit Minutes on the constraint Multiple Choice O Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your intermediate calculations to 2 decimal places.) O JQ, RQ, LN RQ, LN, JQ RQ, JQ, LN LN $160.46 $ 106.40 3.40 LN, JQ, RQ JQ $ 346.18 $ 281.70 5.20 RQ $ 409.29 $ 311.25 8.60
Suppose that a manufacturer can produce a part for $11.00 with a fixed cost of $7,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $13.00, which includes transportation. a. If the anticipated production volume is 1,300 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision? a. The total cost of manufacturing is $.
Rylan corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available Domestic sales price: $22 Unit manufacturing costs: Variable: 11 Fixed: 6 A. What is the amount of income or loss from acceptance of the offer? B. What is the differential cost from acceptance of the offer?
The Shine Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model: Variable manufacturing costs Applied fixed manufacturing overhead Variable selling and administrative costs Applied fixed selling and administrative costs What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 235%? Multiple Choice $1,565.25. $1,700.25. $1,835.25. $2,060.25. None of these answer choices is correct. $ 440 220 175 190