***** URGENT PLEASE HELP, I HAVE ALREADY POSTED THIS QUESTION ONCE AND DIDN TGET
ID: 363269 • Letter: #
Question
***** URGENT PLEASE HELP, I HAVE ALREADY POSTED THIS QUESTION ONCE AND DIDN TGET ANY RESPONSE. I AM LOST ON EVEN WHERE TO BEGIN. I WOULD GREATLY APPRECIATE SOME GUIDANCE WITH THIS PROBLEM!!!***** THANK YOU SO MUCH!!!
In consultation with members of the economics department at a local college the marketing department has been able to gain some insight into the elasticity of demand for the higher quality product.
In addition, members of the faculty in the materials and logistics department were able to incorporate various economies of scale into the cost estimates. The fixed costs for different size processes as well as the variable cost information is presented with the sales information in table 1.
Table 1
Parameters for Alternative Sales Volumes (Process 1 only)
Option
Number
Selling
Price
Sales
Volume
Fixed
Cost
Variable
Cost/unit
1
12.5
25,000
50,000
10.00
2
10.00
50,000
75,000
8.00
3
8.25
65,000
85,000
5.0
4
7
75,500
90,000
3.0
5
6
80,750
90,000
2.5
A: What should Goliath do and how much money will they make if their goal is to make as much money as possible?
B: What should Goliath do if their goal is to maximize their return on investment? How much money will they make and what ROI will it generate?
C: What should Goliath do and how much money will they make if their goal is maximize their market share?
**** CAN SOMEONE PLEAS HELP ME WITH THE FOLLOWING PROBLEM, THIS IS AN EXAMPLE OF ONE OF MY STUDY QUESTIOSN THAT I USE TO GO BY, STEP BY STEP WOULD BE HIGHLY APPRECIATED IN SOLVING THIS PROLEM!!***** THANK YOU IN ADVANCE :)
Option
Number
Selling
Price
Sales
Volume
Fixed
Cost
Variable
Cost/unit
1
12.5
25,000
50,000
10.00
2
10.00
50,000
75,000
8.00
3
8.25
65,000
85,000
5.0
4
7
75,500
90,000
3.0
5
6
80,750
90,000
2.5
Explanation / Answer
4*75,500 =
Ans A: From the above table it can be seen, Option 4 should be used in order to maximize profit and the profit will be 2,12,000.
Ans B: ROI = Sales Margin / Capital Turnover
Option 1 ROI = 0.64%
Option 2 ROI = 0.75%
Option 3 ROI = 3.73%
Option 4 ROI = 6.83%
Option 5 ROI = 7.39%
ROI is highest for Option 5 which is at 7.39% and profit generated will be 1,92,625.
Ans C: Market share will be highest for Option 3 with a sales revenue of 5,36,250 and profit will be 1,26,250.
Option Number Selling Price Sales Volume Fixed Cost Variable Cost/Unit Contribution Margin Operating Profit Net Profit 1 12.5 25,000 50,000 10 (12.5-10)=2.5 2.5*25,000 = 62,500 62,500-50,000 = 12,500 2 10 50,000 75,000 8 (10-8) = 2 2*50,000 = 1,00,000 1,00,000 - 75,000 = 25,000 3 8.25 65,000 85,000 5 (8.25-5) = 3.25 3.25*65,000 = 2,11,250 2,11,250 - 85,000 = 126250 4 7 75,500 90,000 3 (7-3)=44*75,500 =
3,02,000 3,02,000 - 90,000 = 2,12,000 5 6 80,750 90,000 2.5 (6-2.5)=3.5 2.5*80,750 =2,82,625 2,82,625 - 90,000 = 1,92,625Related Questions
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