Question

Discuss problems 12, 14, and 15 in chapter 1 and explain the methodologies they used and why they decided to do so for each question. 12) The O'Neill Shoe Manufacturing Company will produce a special-style shoe if the order size is large enough to provide a reasonable profit. For each special-style order, the company incurs a fixed cost of $2000 for the production setup. The variable cost is $60 per pair, and each pair sells for $80. a. Let x indicate the number of pairs of shoes produced. Develop a mathematical model for the total cost of producing x pairs of shoes. b. Let P indicate the total profit. Develop a mathematical model for the total profit realized from an order for x pairs of shoes. c. What is the breakeven point? 14) Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $160,000. Variable production and material costs are estimated to be $6 per book. Demand over the life of the book is estimated to be 4000 copies. The publisher plans to sell the text to college and university bookstores for $46 each. a. What is the breakeven point? b. What profit or loss can be anticipated with a demand of 3500 copies? c. With a demand of 3500 copies, what is the minimum price per copy that the publisher must charge to break even? d. If the publisher believes that the price per copy could be increased to $50.95 and not affect the anticipated demand of 4000 copies, what action would you recommend? What profit or loss can be anticipated? 15) Preliminary plans are underway for construction of a new stadium for a major league baseball team. City officials question the number and profitability of the luxury corporate boxes planned for the upper deck of the stadium. Corporations and selected individuals may purchase a box for $300,000. The fixed construction cost for the upper-deck area is estimated to be $4,500,000, with a variable cost of $150,000 for each box constructed. a. What is the breakeven point for the number of luxury boxes in the new stadium? b. Preliminary drawings for the stadium show that space is available for the construction of up to 50 luxury boxes. Promoters indicate that buyers are available and that all 50 could be sold if constructed. What is your recommendation concerning the construction of luxury boxes? What profit is anticipated?

Discuss problems 12, 14, and 15 in chapter 1 and explain the methodologies they used and why they decided to do so for each question.

12) The O'Neill Shoe Manufacturing Company will produce a special-style shoe if the order size is large enough to provide a reasonable profit. For each special-style order, the company incurs a fixed cost of $2000 for the production setup. The variable cost is $60 per pair, and each pair sells for $80.

a. Let x indicate the number of pairs of shoes produced. Develop a mathematical model for the total cost of producing x pairs of shoes.

b. Let P indicate the total profit. Develop a mathematical model for the total profit realized from an order for x pairs of shoes.

c. What is the breakeven point?

14) Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $160,000. Variable production and material costs are estimated to be $6 per book. Demand over the life of the book is estimated to be 4000 copies. The publisher plans to sell the text to college and university bookstores for $46 each.

a. What is the breakeven point?

b. What profit or loss can be anticipated with a demand of 3500 copies?

c. With a demand of 3500 copies, what is the minimum price per copy that the publisher must charge to break even?

d. If the publisher believes that the price per copy could be increased to $50.95 and not affect the anticipated demand of 4000 copies, what action would you recommend? What profit or loss can be anticipated?

15) Preliminary plans are underway for construction of a new stadium for a major league baseball team. City officials question the number and profitability of the luxury corporate boxes planned for the upper deck of the stadium. Corporations and selected individuals may purchase a box for $300,000. The fixed construction cost for the upper-deck area is estimated to be $4,500,000, with a variable cost of $150,000 for each box constructed.

a. What is the breakeven point for the number of luxury boxes in the new stadium?

b. Preliminary drawings for the stadium show that space is available for the construction of up to 50 luxury boxes. Promoters indicate that buyers are available and that all 50 could be sold if constructed. What is your recommendation concerning the construction of luxury boxes? What profit is anticipated?

Added by Sandy L.

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