Question

Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes...

Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes 5,000 chainsaws each year and sells them for $200 each. You suspect that the company should be able to sell more chainsaws and for a higher price. However, if you raise the price too high, not as many would sell. The company also doesn’t have any storage space so if the company makes more chainsaws than they can sell, they will have to pay someone to store them. Your goal is to maximize profit, that is, the amount of money your company earns minus the amount your company spends.

It costs the company $95 for the materials to make each chainsaw, and it costs $400,000 each year to run the electric chainsaw factory. You conducted market research and found that at the current price of $200 per chainsaw, the company should be able to sell 14,000 units. You also found that if the price was raised to $220 each, the company should be able to sell 11,000 units.

  1. If the current production is 5,000 chainsaws per year, how much extra profit would the company get if they produced one more chainsaw?

Math   Calculus   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes...
Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes 5,000 chainsaws each year and sells them for $200 each. You suspect that the company should be able to sell more chainsaws and for a higher price. However, if you raise the price too high, not as many would sell. The company also doesn’t have any storage space so if the company makes more chainsaws than they can sell, they will have to pay...
Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes...
Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes 5,000 chainsaws each year and sells them for $200 each. You suspect that the company should be able to sell more chainsaws and for a higher price. However, if you raise the price too high, not as many would sell. The company also doesn’t have any storage space so if the company makes more chainsaws than they can sell, they will have to pay...
Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes...
Scenario: You are the manager of a company that manufactures electric chainsaws. Currently the company makes 5,000 chainsaws each year and sells them for $200 each. You suspect that the company should be able to sell more chainsaws and for a higher price. However, if you raise the price too high, not as many would sell. The company also doesn’t have any storage space so if the company makes more chainsaws than they can sell, they will have to pay...
You company sells inflatable suitcases that get bigger or smaller depending on the amount of clothing...
You company sells inflatable suitcases that get bigger or smaller depending on the amount of clothing inside them. Each suitcase costs $40 to manufacture, and you sell them for an average of $110 per unit. It costs $5,000 per day to operate your factory (which is your only fixed cost). Noted travel writer Angelina Kumars has offered to endorse your suitcase for $36,500 per year ($100/day). You believe that, with Ms. Kumars' endorsement, you will sell an average of 120...
X Company currently makes 7,500 units of a component part each year, but is considering buying...
X Company currently makes 7,500 units of a component part each year, but is considering buying it from a supplier for $8.00 each. The current annual cost of making the part is $64,700. The supplier wants X Company to sign a contract for the next six years. If X Company buys the part, it will be able to sell the equipment that it currently uses to make the part for $16,000, but the equipment will have no salvage value at...
X Company currently makes 7,000 units of a component part each year, but is considering buying...
X Company currently makes 7,000 units of a component part each year, but is considering buying it from a supplier for $8.60 each. The current annual cost of making the part is $63,900. The supplier wants X Company to sign a contract for the next five years. If X Company buys the part, it will be able to sell the equipment that it currently uses to make the part for $10,000, but the equipment will have no salvage value at...
Rainy Day Company Corporation manufactures umbrellas. The company currently makes the handles for the umbrellas, however,...
Rainy Day Company Corporation manufactures umbrellas. The company currently makes the handles for the umbrellas, however, they have been approached by an outside supplier for to purchase the handles from them at a cost of $4.00. Management is trying to determine which is more cost effective and have provided some information for you to analyze: Per Unit Total Direct Materials $3.50 Direct Labour $3.00 Production supervisor $4.00 $80,000 Depreciation $1.00 $20,000 Rent $0.25 $5,000 The production supervisor will be employed...
Hacker Golf has developed a unique swing trainer golf club.  They currently pay a production company to...
Hacker Golf has developed a unique swing trainer golf club.  They currently pay a production company to produce the golf club for them at a cost of $22 each.  Other variable costs total $6 per golf club, and fixed expenses are $192,000. Hacker Golf currently sells the trainer golf club for $48.  NOTE:  Solve each requirement as a separate situation and  always go back to original data unless otherwise directed. Round all answers to nearest unit or nearest cent. A. Calculate Hacker’s annual breakeven point...
A company must decide between scrapping or reworking units that do not pass inspection. The company...
A company must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that cost $6 per unit to manufacture. The units can be sold as is for $2.00 each, or they can be reworked for $4.50 each and then sold for the full price of $8.50 each. If the units are sold as is, the company will be able to build 22,000 replacement units at a cost of $6 each, and sell...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new unit purchases as well as replacement canopies. Campbell developed its business plan for the year based on the assumption that canopies would sell at a price of $400 each. The variable costs for each canopy were projected at $200, and the annual fixed costs were budgeted at $120,000. Campbell’s after-tax profit objective was...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT