Quality product, Strategic Management

An electronics firm is presently manufacturing an item that has a variable cost of $0.50 per unit and a selling price of $1.00 per unit.  Fixed costs are$14,000 per month.  present volume is 30,000 units per month.  The firm wants to better the product quality by adding a new piece of equipment at an additional fixed cost of $6,000 a month.  Variable cost would enhance to $0.60 a unit but volume should jump to 50,000 units a month due to improved productivity.  Though the new product is of a higher quality, the firm intends to stay with the selling price of $1.00 per unit (for competitive purposes).

(a)    Should the firm buy the latest equipment?

(b)    The firm is now considering stepping the new volume to 45,000 units a month to make even better quality products and enhance the selling price to $1.10 a unit.  Under these circumstances, should the company buy the latest equipment and enhance the selling price?

Posted Date: 3/25/2013 4:14:07 AM | Location : United States

Related Discussions:- Quality product, Assignment Help, Ask Question on Quality product, Get Answer, Expert's Help, Quality product Discussions

Write discussion on Quality product
Your posts are moderated
Related Questions
(a) Illustrate the difference between symmetric and asymmetric encryption, listing an advantages and a disadvantage of each. (b) What functions should be given by a public key

refer to case scenario,is ICP''s focuse low-cost/price strategy opproprate for its industy?why?

ZEZ Company is in the business of designing and printing bottle labels for soft drinks distributors. The company is, at present, facing very difficult times as recessionary economi

I have one real option problem I need help with

Louise Nance had working on the assembly line of the Jackson Manufacturing Company for about six months. During recent weeks, her supervisor, Ben Miller, noticed that her productio

Q. Show the Merits of residual income? Merits of residual income (RI) -  Consistent or goal congruence with profit maximisation e.g. an enforced measure of profitability.

The objective of the term project is to demonstrate your understanding and ability to apply the body of knowledge covered in this course. The goal will be on identifying communicat

how much for a dissertation 15,000 words due in June with the topic is Strategic management? thanks

Why are Crafting & Executing Strategy Important? 1.   Crafting & executing strategy are the top managerial tasks for two very large motives:- (a). Here, compelling requirem

What Does Process of Crafting & Executing Strategy Entail? 1.   Crafting & executing a company's strategy is a five-stage managerial process: (a). Developing a strategic vi