Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $9 per unit, and the contribution margin of the next best alternative of the facility to be $5 per unit, then if Chade has: a. Full capacity, the company will be profitable at $4 per unit. b. Excess capacity, the company will be profitable at $6 per unit. c. Full capacity, the selling price must be greater than $5 per unit. d. Excess capacity, the selling price must be greater than $9 per unit

Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $9 per unit, and the contribution margin of the next best alternative of the facility to be $5 per unit, then if Chade has: a. Full capacity, the company will be profitable at $4 per unit. b. Excess capacity, the company will be profitable at $6 per unit. c. Full capacity, the selling price must be greater than $5 per unit. d. Excess capacity, the selling price must be greater than $9 per unit

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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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?
Special order, opportunity cost. Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $9 per unit, and the contribution margin of the next best alternative of the facility to be $5 per unit, then if Chade has: Full capacity, the company will be profitable at $4 per unit. Excess capacity, the company will be profitable at $6 per unit. Full capacity, the selling price must be greater than $5 per unit. Excess capacity, the selling price must be greater than $9 per unit.
A manager is trying to decide whether to purchase a certain part or to have it produce internally. Internal production could use either of two processes. One would entail a variable cost of P17 per unit and an annual fixed cost of P200,000, the other would entail a variable cost of P14 per unit and an annual fixed cost of 240,000. Three vendors are willing to provide the part. Vendor A has a price of P20 per unit for any volume up to 30,000 units. Vendor B has a price of P22 per unit for demand of 1,000 units less, and P18 per unit for larger quantities. Vendor C offers a price of P21 per unit for the first 1,000 units, and P19 per unit for additional units. Required: If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint?
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?
The marketing manager of Jordan Corporation has determined that a market exists for a telephone with a sales price of $19 per unit. The production manager estimates the annual fixed costs of producing between 41,600 and 80,700 telephones would be $310,200. Required Assume that Jordan desires to earn a $120,000 profit from the phone sales. How much can Jordan afford to spend on variable cost per unit if production and sales equal 47,800 phones? Variable cost per unit
To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $32.50 per unit, and will incur a variable cost of $11.25 per unit. Given Blue Mouse’s cost structure, it will have to sell units to break even on this project (QBEQBE). Blue Mouse Manufacturers’s marketing sales director doesn’t think that the market for the firm’s goods is big enough to sell enough units to make the company’s target operating profit of $25,000,000. In fact, she believes that the firm will be able to sell only about 150,000 units. However, she also thinks the demand for Blue Mouse Manufacturers’s…
To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $37.50 per unit, and will incur a variable cost of $11.25 per unit. Given Blue Mouse’s cost structure, it will have to sell units to break even on this project (QBEQBE).
Ignite Products is a price-taker. The company produces large spools of electrical wire in a highly competitive market; thus, it uses target pricing. The current market price of the electric wire is $800 per unit. The company has $3,200,000 in average assets, and the desired profit is a return of 8% on assets. Assume all products produced are sold. The company provides the following information: Sales volume Variable costs Fixed costs O A $12,000,000 B. $71,000,000 units per year per unit $12,000,000 per year If fixed costs cannot be reduced, how much reduction in variable costs will be needed to achieve the desired target? OC. $256,000 O D. $3,256,000 100,000 $710
Muscat Inc. has been manufacturing its own Camera for its Mobile Phone. The company is currently operating at 100% of capacity. Variable manufacturing overhead cost is OMR 3 per unit. The direct materials and direct labor cost per unit to make the camera are OMR 4 and OMR 6, respectively, fixed cost is OMR 50,000. Normal production is 50,000 Mobile Phone per year.
The marketing manager of Perez Corporation has determined that a market exists for a telephone with a sales price of $22 per unit. The production manager estimates the annual fixed costs of producing between 40,800 and 81,700 telephones would be $374,100. Required Assume that Perez desires to earn a $133,000 profit from the phone sales. How much can Perez afford to spend on variable cost per unit if production and sales equal 46,100 phones? Variable cost per unit
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
How I can resolve this problem. The management of a firm wants to introduce a new product. the product will sell for $4 a unit and can be produced by either of two scales of operation. in the first, total cost are. TC= $3,000 +$2.8Q In the second scale of operation, total cost are TC=$5,000+$2.04Q a. what is the break-even level of outpur for each scale of operation? b. what will be the firm;s profit for each scale of operation if sales reach 5,000 units? c. one-half of the fixed cost are noncash(depreciation) . all other expenses are for cash. if sale are 2,000 units, will cash receipts cover cash expenses for each scale of operation? d. the anticipaded levels of sales are the following: Year Unit Sales 1 4,000 2 5000 3 6,000 4 7,000 If management selects the scale of production which higher fixed cost, what can it expect…