A manufacturer of Bluetooth headphones examines the historical demand of its product and learns that the average monthly demand is about 2,980 headphones but varies between 2,400 and 4,000 headphones. Each pair of the headphones has a retail price of $70. The monthly fixed production cost ranges from $6,300 to $9,000, with an average of $8,500. The average variable cost of producing a pair of headphones is $27, but because the manufacturing process is not fully automated, the variable cost may vary between $21 and $51 per pair. Develop a risk analysis model to answer the following questions. a. What is the monthly profit from the Bluetooth headphones for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit b. The company notices that during the holiday season in December, the demand tends to be higher than in other months. Historically, the demand in December is about 3,468 pairs on average, but also ranges from 2,585 to 4,657 pairs. What is the December profit for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit

A manufacturer of Bluetooth headphones examines the historical demand of its product and learns that the average monthly demand is about 2,980 headphones but varies between 2,400 and 4,000 headphones. Each pair of the headphones has a retail price of $70. The monthly fixed production cost ranges from $6,300 to $9,000, with an average of $8,500. The average variable cost of producing a pair of headphones is $27, but because the manufacturing process is not fully automated, the variable cost may vary between $21 and $51 per pair. Develop a risk analysis model to answer the following questions. a. What is the monthly profit from the Bluetooth headphones for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit b. The company notices that during the holiday season in December, the demand tends to be higher than in other months. Historically, the demand in December is about 3,468 pairs on average, but also ranges from 2,585 to 4,657 pairs. What is the December profit for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter9: Applications Of Cost Theory

Section: Chapter Questions

Problem 3E

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Given = TC = f(q) = 0.3q2 -105q + 120,000 What volume should be produced for minimum cost? What is the minimum cost?
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Suppose that the monthly cost, in dollars, of producing x chairs is C(x)=0.005x³ +0.07x² +19x + 700, and currently 35 chairs are produced monthly. a) What is the current monthly cost? b)What is the marginal cost when x = 35? c) Use the result from part (b) to estimate the monthly cost of increasing production to 37 chairs per month. d)What would be the actual additional monthly cost of increasing production to 37 chairs monthly? a) The current monthly cost is $ (Round to the nearest cent as needed) b) The marginal cost when x = 35 is $ per item. (Round to the nearest cent as needed.) c) Use the result from part (b) to estimate the monthly cost of increasing production to 37 chairs per month. The monthly cost in increasing production to 37 chairs monthly is $ (Round to the nearest cent as needed) d) The actual additional monthly cost of increasing production to 37 chairs monthly is $ (Round to the nearest cent as needed.)
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A company estimates that the relationship between unit price and demand per month for a new product is approximated by p= $100- $0.10D. The company can produce the product by making the fixed costs $15,972 per month and the estimated variable cost is $ 45 per unit. What is the optimal demand? Express answer in whole number.
ADTF Distributors produces and sells a line of virtual sketch pad devices with a micro-USB connection. They find that their profit when producing and selling x devices changes according to the marginal profit function P'(x) = 60 -0.1x. dollars per device. They also know that when only 10 devices are produced and sold their loss can be expressed as P(10) = -650. (a) Find the function for the total profit from producing and selling x virtual sketch pad devices: P(x) = (b) Use your answer to part (a) to complete the following sentence. When ADTF Distributors produces and sells 603 virtual sketch pad devices, we predict that their total profit will be $ (c) From the profit function, we can conclude that the fixed costs when producing the devices is $ Given that the variable costs of the production are $27 per device, then the total cost to produce 603 virtual sketch pad devices will be $ (d) When 603 devices are produced and sold, the selling price must be $ Hint: First, find the total…
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