Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

problem1. KopyKat is a firm which specializes in printing business cards and résumé’s, using the new laser technology. The manager has estimated that weekly demand can be approximated through P = 25 – 0.001Q, where P is price and Q is output per week. The firm’s cost function is C = 25,000 + 13Q + 0.002Q^2, where C is total cost. (MR = 25 – 0.002Q; MC = 13 + 0.004Q)

(i) Find out the firm’s profit maximizing output and price.

(ii) The night supervisor thinks that extending KopyKat’s hours through two hours in the evening would substantially raise volume. The manager is willing to stay open for two hours over the next three months as an experiment. What results would lead the manager to decide if the store can remain open later in the evening on a permanent basis?

(iii) A former employee decides to sue KopyKat, alleging employment discrimination. Though management claims innocence, they agree to settle out of court. The settlement needs KopyKat to pay the employee $10,000 per month for the next year. Find out the optimal output and price for the firm under these new conditions.

problem2. Firm Z is a U.S. based firm which sells farm equipment and faces demand given by P 3,000 – Q, where P denotes price in dollars and Q is quantity of units sold per month. In its East coast factory, the firm’s fixed costs are $250,000 per month, and its marginal cost of manufacturing the equipment is $1,000 per unit. (Part (a) MR = 3000 – 2Q; part (b) MR = 2,500 – 2Q; part (d) MR = 2,800 - 4Q)

(i) Find the firm's profit-maximizing price and output. What is its profit?

(ii) Over the last year, the US dollar has appreciated (gained value) versus the Japanese yen with the result which Japanese imports of farm equipment to the US have raised. Firm Z’s marketing department judges which it now would have to cut price by $500 per unit in order to sell the same profit-maximizing quantity as estimated earlier (The price equation will shift in-ward toward the origin). Is the price-cut consistent with a profit maximizing strategy? Describe.

(iii) Assume that a new market for firm's product emerges in South America. Firm Z has begun selling the equipment in various test markets there and has found the elasticity of demand to be EP = –3 for a wide range of prices (between $1,500 and $2,500). The cost of shipping to South America is $200 per unit. One manager argues which the foreign price must be set at $200 above the earlier profit-maximizing price to cover the transportation cost. Do you agree that this is the optimal foreign price? Justify your answer.

(iv) Assume that the firm has manufactured the optimal level of output in part (a). But before this quantity is sold, demand unexpectedly falls to: P = 2,800 - 2Q, (equivalently Q = 1,400 - 0.5P). One manager recommends cutting price to sell the whole inventory; another favour maintaining the price in part (a) (selling less than the total inventory). Do you concur with either manager? What optimal price would you set?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M9702

Have any Question? 


Related Questions in Financial Accounting

1 describe the formal procedures associated with issuing

1. Describe the formal procedures associated with issuing long-term debt. 2. Describe the nature, type, and valuation of current liabilities. 3. Explain the accounting for different types of loss contingencies. 4. Explai ...

Prior to the financial meltdown that occurred around 2008

Prior to the financial meltdown that occurred around 2008, bond-rating agencies were accused of unethical behavior because they were paid by the organizations that they rated. Many of these companies would shop around fo ...

Assignmentrowland company is a small editorial services

Assignment Rowland Company is a small editorial services company owned and operated by Marlene Rowland. On August 31, 2016, the end of the current year, Rowland Company's accounting clerk prepared the following unadjuste ...

Tootsie roll industries2015 annual report analysis

Tootsie Roll Industries 2015 Annual Report Analysis Questions Net earnings refers to net income temporary investments are current assets Q1 Where are its corporate headquarters? on What date was tootsie roll's last annua ...

Assignmentsqueezed by rising costs a confectioner struggles

Assignment Squeezed by Rising Costs, a Confectioner Struggles to Cope Telford James and his wife Ivey are the second-generation owners of James Confectioners, a family-owned manufacturer of premium chocolates that was st ...

Paperwrite a 750- to 1050-word paper in which

PAPER Write a 750- to 1,050-word paper in which you: • Explain the principles of internal control. • Explain the use of cash and internal controls to prevent fraud. • Explain why corporations invest in stocks and debt se ...

Describe six different subjects a risk manager should

Describe six different subjects a risk manager should include in a curriculum designed for physicians to engage them in patient safety practices. Describe what might be included in each of these modules. Before you do th ...

Assignmentusing the transactions listed below for audreys

Assignment Using the transactions listed below for Audrey's Ice Cream Parlor, prepare a statement of cash flows for the month of April 2012. Classify the transactions into appropriate categories (operating activities, in ...

The ryde and rowe inc had the following account balances as

The Ryde and Rowe Inc. had the following account balances as of January 1: Direct Materials Inventory $ 8,700 Work in Process Inventory 76,500 Finished Goods Inventory 53,000 Manufacturing Overhead 0 During the month of ...

Module two financial statement analysis worksheetthe main

Module Two Financial Statement Analysis Worksheet The main goal of financial statement analysis is to use past and current performance to identify changes and trends that will affect a company. Financial ratios are a wid ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro