Estimate the total contribution to profits from new product

Assignment Help Operation Management

Reference no: EM1399769

Mary Williams, owner of Williams Products, is evaluating whether to introduce a new product line. After thinking through the production process and the costs of raw materials and new equipment. Williams estimates the variable costs of each unit produced and sold at $6 and the fixed costs per year at $60,000

a. If the selling price is set at $18 each, how many units must be produced and sold for Williams to break even? Use both graphic and algebraic approach to get your answer.

b. Williams forecasts sales of 10,000 units for the first year if the selling price is set at $14.00 each. What would be the total contribution to profits from this new product during the first year?

c. If the selling price is set at $12.50, Williams forecasts that first-year sales would increase to 15,000 units. Which pricing strategy ($14.00 or $12.50) would result in the greater total contribution to profits?

d. What other considerations would be crucial to the final decision about making and marketing the new product?

Reference no: EM1399769

Questions Cloud

Lowest possible score a student needs to qualify : Given that SAT test scores are normally distributed with a mean of 1000 and a standard deviation of 200, what is the lowest possible score a student needs to qualify for acceptance into the university?

The contract among press publishing and boardwalk books : Press Publishers sold 100 copies of a fresh hardback book entitled Business Law to Boardwalk Books. The contract among Press Publishing and Boardwalk Books provides in relevant part that Boardwalk may return to Press any unused copies of the book ..

Calculate the strength of your bargaining position : Consider the subsequent hypothetical. You've arrived into a contract to purchase a new house as well as the closing is scheduled for next week. It's typical for few last-minute bargaining to take place at the closing table where sellers frequently..

Varinace-range -standard deviation : (a) Find the range. (b) Find the variance. (Give your answer correct to two decimal places.) (c) Find the standard deviation. (Give your answer correct to two decimal places.)

Estimate the total contribution to profits from new product : Mary Williams, owner of Williams Products, is evaluating whether to introduce a new product line. After thinking through the production process and the costs of raw materials and new equipment.

Report on the risk avoidance strategies : Report on the risk avoidance strategies. Conduct research on what companies can do to minimalize legal risks associated with sales contracts product liability and performance on sales contracts.

Proposals on total surplus including social cost and benefit : Describe the likely impact of each of these three proposals on total surplus including social cost and benefit and Which of these proposals is most consistent with the Coase approach to externalities

What are the probable advantages of a compressed work week : What are the probable advantages and disadvantages of a compressed work week? Would you need to work in a compressed work week? Why or why not? Reply to at least two of your classmates' postings.

Probability that he gets a hit in next bat : A baseball player gets a hit in 30 out of 100 times at bat. What is the probability that he gets a hit in his next at bat?

User Account

All Pages