Showthestepbystepsolutions tothefollowingquestions:

1. Afirmis abletosell10,000units at$
12 perpiece.Thecompanyfixed
costis$30,000.Variablecostis
$6 perunit.

a.
Whatis thecontributionperunit?

b.
Whatis
the
breakeven
salesin$?What isthe breakeven
salein
units?

c.
What isthe
markup
on sales price?Whatisthe
markup on totalcost?

Theyraise
theprice
to$15and demand dropsto
8000.

d. Calculatethe
price elasticity.

e.
Whatis thenewmarkup (profitmargin %)onthesales price
($15)?What isthenewmarkup
(profitmargin %) ontotalcost?

f.
Please calculatethetotalprofitforthis companyas
wellasthe
profitpereachtoysold. Aretheybetteroff raisingthe price?

2.
Afirmis
abletosell10,000 units.The companyfixed costis $10,000.Variablecostis$6perunit.Contribution margin (CM) is $4.

a.
Whatis the
markup
(profitmargin %)
on sales price?What isthe
markup on totalcost(profitmargin

%)?

b. If the
price elasticityofdemand is2, howmanyunitstheycan selliftheydroptheSPby$2.

c.
Whatis thenewmarkup
on sales price?Whatis the newmarkup on totalcost?
(Hint:usethenewsales)

d.
Please calculate thetotalprofitforthis companyas wellasthe profitpereachtoysold(Hint:use the
new demand)

3.
Acompany manufacturingcars
has a fixedcostof$100,000.Variablecost is$6
percar.
Sellingpriceis$10per car.
Companytargetprofit is $120,000.

a.
Howmanycarsshould
be sold to
reachthetargetprofit?

b.
Thecompanyfoundthatitsvariablecostis
goingtoincrease
by$2 and plans to raise its
sellingprice
by$3andreduced thefixedcostsby$20,000.
Howmany
more(less)cars have
tobe soldatthe newprice to reach
thetargetprofitof$120,000?

c.
What isthe
markup (profitmargin
%) on sales
price
at
thisnewsales
volume? Whatisthe markup
(profit margin %)on
totalcost?

4. Markis developinga
business planforstartingPizza
business inWaltham.
Markspecializes
in pepperonipizza.

Based onthesecondarydata he has
found out that there
are20,000familiesintheareaandabout20%of these
families are
strictvegetarians.
He believes thathe
canget10%of the marketshare ofthe
potentialcustomers.
Hisresearchreveals
anaverage familyconsumes 10pizzas
peryear.

Itcosts
atotalof$ 6to
make
a Pepperonipizza.Markisplanningtointroduce hisPepperonipizza
at$ 8andraise the price by$2 inthe
second year. Price elasticityofdemand forpizza
is0.50

a.
Estimatethedemand forMark’s
pizza in the firstyear

b. Calculatethe%markup (profitmargin %)on sales
price andtotalcost inthefirstyear

b. Estimatethedemand
forPizza in the
second
yearwiththe newprice.

d. Calculatethe%markup
on sales price
andtotalcost inthe
second year

5.
NYUis planningto
replacethe centralA/Csystemforthe
classrooms.In
response totheirrequestforproposal,
NYUreceived two proposals.
Thedetails
ofthe
proposalare
given below.

UselifecyclecoststorecommendasystemforNYU.Showthecalculationstosupportyour
recommendations.

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