Problem Solving.Determine for what is asked. Show your solution legibly. Improper solution will not be credited. Consider the following cost and pricing data of ABC Corp. on its Product X: Price: P120.00.per unit Profit Contribution: P90.00 Proposed additional Cost: P3 per unit (for quality improvement) Current Profits: P2.4 million Sales: 100,000 units. A. Assuming that average variable costs are constant at all output levels, find ABC Corp.’s total cost function before the proposed change. B. Calculate the total cost function if the quality improvement is implemented. C. Calculate ABC Corp.’s break-even output before and after the change, assuming it cannot increase its price. D. Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million
Problem Solving.Determine for what is asked. Show your solution legibly. Improper solution will not be credited.
Consider the following cost and pricing data of ABC Corp. on its Product X:
Price: P120.00.per unit
Profit Contribution: P90.00
Proposed additional Cost: P3 per unit (for quality improvement)
Current Profits: P2.4 million
Sales: 100,000 units.
A. Assuming that
ABC Corp.’s total cost function before the proposed change.
B. Calculate the total cost function if the quality improvement is implemented.
C. Calculate ABC Corp.’s break-even output before and after the change, assuming it cannot increase its price.
D. Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million
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