2. At the end of the year, a company offered to buy 4,180 units of a product fro
ID: 2453139 • Letter: 2
Question
2. At the end of the year, a company offered to buy 4,180 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $18.00 each. The following information relates to the 60,300 units of the product that X Company has already made and sold to its regular customers: Total Per-Unit Revenue $1,085,400 $18.00 Cost of Goods Sold Variable 375,066 6.22 Fixed 134,469 2.23 Selling and Administrative Costs Variable 84,420 1.40 Fixed 90,450 1.50 Profit $400,995 $6.65
B)The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 800 units. The effect of this loss of sales will be to decrease firm profits by....?
3. The following information is for X Company's two products, A and B: Product A Product B Revenue $93,000 $86,000 Total contribution margin 39,990 38,700 Total fixed costs 26,240 58,710 Profit $13,750 $-20,010
4. X Company currently buys 7,500 units of a component part each year from a supplier for $8.70 each, but it is considering making the part instead. In order to make the part, X Company will have to buy equipment that will cost $150,000. The equipment will last for six years, at which time it will have zero disposal value. X Company estimates that it will cost $36,635 a year to make the 7,500 units. What is the approximate rate of return if X Company makes the part instead of buying it from the supplier?
Present value table if needed
Total Per-Unit Revenue $1,085,400 $18.00 Cost of Goods Sold Variable 375,066 6.22 Fixed 134,469 2.23 Selling and Administrative Costs Variable 84,420 1.40 Fixed 90,450 1.50 Profit $400,995 $6.65 Table 1: Present Value of $1.00 0961 0.924 0.888 0835 772 0 751 0.7 0792 | 0.7350.NA 068310.6 59 | 0.636 | 0.01) 0592 0572 0942 0,888 0933 0871 0790 0.746 0.705 0813 0,760 14 0.500 12 0788 0.701 0.205 Table 2: Present Value of an Annuity of $1.00 19% 0.962 0952 885 0.877 0 870 1.970 1.942 1.913 I 1859 1.833 736 .795 360 3.41752423.0764.917 4.76 4.623 4486 43 7.020 6.7336.4636210 5.971 5.747 5535 5.33 8.566 8.162 8.983 8.530 7.024 | 6.710 6.418 6.1 10 11 10.368 9.787 9253 8.760 8306 887 7.499 139 6.805 6895 6207 7.904 7487 7.1036 13 12 134 989 9.298.7 7.786 67 6982 6628 6.302 6.002
Explanation / Answer
Answer 1.
Let no. of hair cuts in 2015 =X
Now,
Profit in 2014 = 26000*15-6*53000-18000
= 54000
Calculation of Indifference point
X*15 - 6*22000 - X*7.95-20000= 54000
X= 29220
No. of haircuts that should be given is 29220
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