Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

The Healthy Spring Water company sells bottled water for offices / homes. The price of the water is $20 per 10 gallon bottle and the company currently sells 2,000 bottles per day.

The company's daily income and costs:
Sales revenue: $ 40,000
Variable cost : $ 16,000
Fixed cost: $ 20,000

1. What is the maximum sales loss (in % and in units) that the firm could tolerate before a 20% price increase would fail to be worthwhile? (No change in Fixed Cost ).

2. Following competition, the firm considers a 10% price cut. At present, the delivery capacity is exhausted. To serve more customers, the company will have to add one or more additional trucks and drivers. Each truck would deliver up to additional 400 bottles daily, at a daily operating costs (wage, fuel, etc) of $500. What is the minimum sales gain (in % and in units) that the firm must obtain to make a 10% price cut worthwhile?

3. If the actual sales gain following the 10% price reduction were 700 bottles daily, what would be the change in net profit resulting from the price change?

4. A competitor with a very similar price is rumored to reduce his price of a bottle by 15%. Please suggest a well based (i.e. find outd) advice to the firm's reaction.

5. If on average, a customer who buys a bottle, buys from the firm 2 boxes of disposable cups, each box costs the firm $3 and priced at $7 - How would your answers to problem 2 above change ? Under such circumstances, can a promotional campaign of a price of $7 a bottle, be profitable?

6. Derivation problem: Derive the expression for Iso-Contribution relative change of sales quantity (assume no change in fixed costs) when there is a relevant change in the Variable Cost per unit (for all units - not just the additional ones). Give a realistic ex of such a change.

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M926346
  • Price:- $35

Guranteed 24 Hours Delivery, In Price:- $35

Have any Question? 


Related Questions in Basic Finance

You are assigned a paper and excel backup on exxon company

You are assigned a paper and excel backup on EXXON company. You will utilize all the material we have covered to analyze and assess the corporate health of the company. I provide some leading questions to be answered in ...

Ford is about to issue a new corporate bond face value 1000

Ford is about to issue a new corporate bond, face value= $1,000, coupon rate 8% (Annual), term to maturity= 4 years. You know that a very similar bond issued by GM is already being traded in a bond market with its market ...

Norsk is a danish company that specializes in food product

Norsk is a Danish company that specializes in food product for daily consumption. It has five associated subsidiaries in the European Union and a network of distributors in North America. Recently, the company has decide ...

1 consider the similarities and differences between basic

1. Consider the similarities and differences between basic research and applied research. What does each contribute to our knowledge about behavior? 2. Describe the characteristics of descriptive, correlational, and expe ...

Earlier this semester you had a discussion question on the

Earlier this semester, you had a discussion question on the shrinking middle class. Subsequent to that discussion question, this article, Richer But not Better Off, appeared in the New York Times. The article pretty much ...

Flip a set of ten coins one hundred times and record the

Flip a set of ten coins one hundred times, and record the number of heads and tails each time. Construct a frequency distribution of the observed data. Check whether the observed frequency distribution appears to match t ...

Class while us treasury stock and bonds are backed with the

Class, while US Treasury Stock and Bonds are backed with the credit of the US Government, there are still risks attached to these investments. What are these risks?

Please show solution without using excel with formulas

Please show solution WITHOUT using excel. With formulas. Thank you. Ford is about to issue a new corporate bond, face value= $1,000, coupon rate % (Annual), term to maturity= 4 years. You know that a very similar bond is ...

You are trying to predict how long a relationship will last

You are trying to predict how long a relationship will last (TIME) based on scores of social compatibility (COMP; how much they like doing the same things, have the same hobbies etc) and how physically attracted the pers ...

Advance inc is trying to determine its cost of debt the

Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has a coupon ra ...

  • 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