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1.
a.
b.
Utilizatio n
Actual output
7
70%
Design capacity 10
Efficiency
Actual output
7
87.5%
Effective capacity 8
Utilizatio n
Actual output
4
67%
Design capacity 6
Efficiency
Actual output
4
80%
Effective capacity 5
c. This is not necessarily true. If the design capacity is relatively high, the utilization could be
low even though the efficiency was high.
2.
Efficiency
Actual output
80%
Effective capacity
Utilizatio n
Actual output
Design capacity
Design Capacity
3.
Actual output
8
20 jobs
Effective capacity .4
FC = $9,200/month
VC = $ .70/unit
Rev = $ .90/unit
a.
Q BEP
FC
$9,200
46,000 units
Rev VC $.90 $.70
c.
126,000 units .
Rev VC
$.90 / unit $.70 / unit
Total Revenue
$23,000
25,556 units
R
$.90 / unit
e.
$100,000
TR
TC
Cost
$50,000
$9,200
0
Volume
(units)
FC
Rev
VC
A: $40,000
$15/unit
$10/unit
B: $30,000
$15/unit
$11/unit
Q BEP
FC
Rev VC
100,000
4.
a.
Q BEP,A
$40,000
8,000 units
$15 / unit $10 / unit
Q BEP,B
$30,000
7,500 units
$15 / unit $11 / unit
Demand = 30,000 = Q
FC = $25,000
VC = $.37/pen
a. Rev = $1.00/pen
Q BEP
FC
$25,000
39,683 units
Rev VC $1.00 $.37
30,000
Rev VC
Rev $.37 / unit
Solving for Rev: Rev = $1.71 [rounded up]
Q
2.
Profit =
(Rev/unit VC/unit)Q FC
Omaha:
K.C.:
Location
Rev/unit
VC/unit
FC
A
$2.65
1.76
$5,000
B
$2.65
1.76
$5,500
C
$2.65
1.76
$5,800
specified profit + FC
a. Q = Rev/unit VC/unit
A
16,854
B
17,416
C
17,753
$13,690
$14,080
$14,670
$800,000
$14,000
$17,000
$920,000
$13,000
$17,000
3.
FC
VC/unit
Rev/unit
a. TC = VC/unit x Q + FC
[A]
[B]
$14,000Q + $800,000 = $13,000Q + $920,000
Solving, Q = 120 units
b. A: 0 to 119
B: 121 or more
A
2,500
$50,000
1,000
4.
FC/year
VC/unit
$250,000
500
a. 500
A (new location)
400
TC
($000)
300
[250]
C (expansion)
200 B (subcontract)
100
[50]
0
33.3
B
100
200
300
400
A
No. of Boats/yr.
Solutions (continued)
b. C (from graph)
c. Subcontracting prices are probably more precise, subcontracting provides another source of
supply. Expansion would allow more control and flexibility.
5.
FC
A
$254,000
B
$25,000
C
$120,000
500
2,500
1,000
VC/unit
TC = VC/unit x Q + FC
A: $500(150) + $254,000 = $329,000
B: $2,500(150) + $25,000 = $400,000
C: $1,000(150) + $120,000 = $270,000*
9.
Factor
1. Conv. access
Wt.
.15
A
.15(80) = 12.00
B
C
.15(70) = 10.50 15(60) = 9.0
2. Parking
.20
.20(72) = 14.40
3. Display area
.18
.18(88) = 15.84
4. Shopper traffic
.27
.27(94) = 25.38
5. Operating costs
6. Neighborhood
.10
.10
.10(98) = 9.80
.10(96) = 9.60
.10(90) = 9.00
.10(85) = 8.50
.10(82) = 8.2
.10(75) = 7.5
1.00
87.02
82.62
80.9
10.
Factor
1. Business Services
Location (a)
A
B
C
9
5
5
2. Community Services
1/9
7/9
6/9
7/9
1/9
3/9
8/9
7/9
4. Construction Costs
5. Cost of Living
5
4
6
7
5
8
2/9
1/9
10/9
12/9
10/9
4/9
7/9
8/9
6. Taxes
1/9
5/9
5/9
4/9
7. Transportation
1/9
6/9
7/9
8/9
39
44
44
1.0
53/9
55/9
54/9
Total
Weight
2/9
Location (b)
A
B
18/9 10/9
C
10/9