Compute the breakeven output quantities

Assignment Help Macroeconomics
Reference no: EM1373874

1) Appalachia Beverage Corporation, is planning alternative proposals for expansion into the Midwest.

Alternative # 1: Construct a single plant in Indianapolis, Indiana, with a monthly production capacity of 300,000 cases, a monthly fixed cost of $262,500, and a variable cost of $3.25 per case.

Alternative # 2: Construct three plants, one each in Muncie, Indiana; Normal, Illinois; and Dayton, Ohio, with capacities of 120,000, 100,000, and 80,000, respectively, and monthly fixed costs of $120,000, $110,000, and $95,000 each. Variable costs would be only $3 per case because of lower distribution costs. To achieve these cost savings, sales from each smaller plant would be limited to demand within its home state. The total estimated monthly sales volume of 200,000 cases in these three Midwestern states is distributed as follows: 80,000 cases in Indiana, 70,000 cases in Illinois, and 50,000 cases in Ohio.
A. Suppose that a wholesale price of $5 per case, compute the breakeven output quantities for each alternative.
B. At a wholesale price of $5 per case in all states, and assuming sales at the projected levels, which alternative expansion scheme provides Appalachia with the highest profit per month?
C. If sales increase to production capacities, which alternative would prove to be more profitable?

2) Is the use of the least-cost input combinations a necessary condition for profit maximization? Is it a sufficient condition? Explain.

3) Describe why the MP/P relation is deficient as the sole mechanism for determining the optimal level of resource employment.

 

Reference no: EM1373874

Questions Cloud

Role of central banks in managing currency : Before September 1992, the lira or DM exchange rate could fluctuate through up to 2.25% up or down. If central banks ensured that the lira or DM exchange rate band was set in this way and could not be changes,
Illustrate what level of safety stock is appropriate if lead : Illustrate what level of safety stock is appropriate if lead time demand is normally distributed with a mean of 80 cases and a standard deviation of 5 cases.
Find the best layout and its cost based on distances : Resolve part A if the rates are Y4 from odd to even departments, Y5 from even to odd, Y6 from odd to odd and Y7 from even to even. find the best layout and its cost based on distances.
Compare and contrast moral philosophies teleology-deontology : Compare and contrast the 2 moral philosophies, teleology and deontology. Explain how each philosophy type would use their beliefs/philosophy to evaluate the morality of a particular activity.
Compute the breakeven output quantities : Appalachia Beverage Corporation, is planning alternative proposals for expansion into the Midwest. Suppose that a wholesale price of $5 per case, compute the breakeven output quantities for each alternative.
Elucidate quality inspector randomly selects for bottles : The quality inspector randomly selects four bottles from the bottle machine and measures the outside diameter of the bottle neck, a critical quality dimension that decides whether the bottle cap will fit properly.
Find the equilibrium level of income : Suppose the following equations explain a hypothetical economy where both price level and interest rates are fixed. Find the equilibrium level of income in this economy
Discuss categories of the swot elements of information : Discuss what categories of the SWOT elements of information are readily available on the Internet. Illustrate what categories of information are difficult or impossible to find on the Internet.
Economy in the short run and in the long run : Using the aggregate demand and supply model, draw an economy in a boom with equilibrium national income above full employment GDP.

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  Which of the happing tends to occur during recessions

Which of the followings tends to occur during recessions Cyclical unemployment tends to fall The stock markets tends to surge (experience a rapid rise in prices) Interest rates tend to fall Gross Domestic Product rises Consumer ..

  Describe what do you mean by the price elasticity of supply

Describe what do you mean by the price elasticity of supply.

  Effects of interest rates on consumer borrowing

The world major central banks, including the U.S. Federal Reserve, European Central Bank, Bank of England and Bank of Japan, conducted a joint policy action on 11/30/11 inject liquidity into global financial markets.

  Assume the sri lanka government awarded contracts

Assume the Sri Lanka government awarded contracts to private companies to rebuild the countryâ.

  The company is risk neutral and so maximizes

The company is risk neutral and so maximizes expected profits net of wages.

  Prepare an income statement and balance sheet

Give a brief written evaluation of Kissick Corporation 's results from operations for the year and its financial position at the end of the year.

  Encourage the optimal price of chocolate production

If the government of Amityville used a subsidy of $S per unit to encourage the optimal amount of chocolate production, illustrate what level should that subsidy be.

  Elucidate a firm competes in the market

Elucidate a firm competes in the market. Does the firm engage in price or non-price competition

  What is bill''s opportunity cost of producing one hat

What is Bill's opportunity cost of producing one hat, In which of the two activities does Mary have a comparative advantage.

  Purpose for rising average variable cost

Describe why the following statement is true: It is possible for average variable cost (AVC) to rise while average total cost (ATC) declines.

  Oligopoly market structure with stackelberg model

You are the manager of a firm in a new industry. You have gotten the jump on the only other producer in the market.

  Determination of monopoly price-output and consumer surplus

Consider a monopolist facing demand curve Q = 100 - P. MC=AC=$20. Find out the monopoly price, profits, and consumer surplus.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd