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Week One Homework Assignment

Name of the Student

Name of the University

Week One Homework Assignment

Q1)

Retread Tire Company

Total cost = Fixed cost+Variable cost

Total cost = 65000+112500

Total cost = $177500

Revenue = 15000*25

Revenue = $375000

Profit/Loss = 375000-177500

Profit/Loss = $197500

Contribution per unit = 25-7.5

Contribution per unit = 17.5

Break even volume = 65000/17.5

Break even volume = 3714 units

Q2)

Evergreen Fertilizer Company

Monthly break even volume = 250000.45-0.20

Monthly break even volume = 100000 units

Q3)

Evergreen Fertilizer Company

With price change

Monthly break even volume = 250000.55-0.20

Monthly break even volume = 71429 units

Q4)

Evergreen Fertilizer Company

Effect of advertising expenditure

Monthly break even volume = 25000+100000.55-0.20

Monthly break even volume = 100000 units

Q5)

Annie MaCoy

Break even Price = 3000+35001500+0.40

Break even Price = $4.73

Factors such as quality of food, the prices the competitors are offering for the same product and the level of occupancy of the stadium can have an effect on the volume sold.

Q6)

Kerouac University

Break even volume = 40000020000-10000

Break even volume = 40 students

Revenue = 80*20000

Revenue = $1600000

Total cost = 10000*80

Total cost = $800000

Profit/Loss = 1600000-800000

Profit/Loss = $800000

Increase tuition to $25000

Reduce enrollment to 50

Revenue = 50*25000

Revenue = $1250000

Total cost = 50*10000

Total cost = $500000

Profit/Loss = 1250000-500000

Profit/Loss = $750,000

This option will cost the university $50,000 in loss. This would not be a suitable option to go for.

Q7)

Probability for grade management

Expected value = 4*0.1+3*0.2+2*0.4+1*0.2+0*0.1

Expected value = 2

This makes the expected grade to be at C

Variance = 42*0.1+32*0.2+22*0.4+12*0.2+02*0.1-(2)^2

Variance = 5.2-4

Variance = 1.2

Q8)

Investment firm

Expected value of good = 380000*0.60+130000*0.60

Expected value of good = $306000

Expected value of poor = 100000*0.40+85000*0.40

Expected value of poor = $74000

Taking the expected value of both the conditions into account, choosing the good option will prove beneficial for the firm.

Q9)

Fertilizer bags

In order to find this, the z value needs to be found first.

Z = x-meanstandard deviation

Z = 38-455

Z = -1.4

Z = 50-455

Z = 1

The probability for z is in between -1.4 to 1

Using the table, the probability that the weight would be in between 38 and 50 pounds is 0.7606

Q10)

Polo Development Firm

Z = 18-155

Z = 0.6

The probability is around 0.7257 that people will not be able to occupy in 18 months.

Q11)

National Video Store

Mean = 175

Standard Deviation = 55

Area under curve to be equal to 0.85 = 0.85-1.00 = 0.75

Value for 0.75 on the table gives a z value of = 0.68

Z = x-17555

0.68 = x-17555

X = x-17555

X = 212.4 or 212 units

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