A Product Is Currently Made in a Process-Focused Shop, Where

question 49

Essay

A product is currently made in a process-focused shop, where fixed costs are $8,000 per year and variable cost is $40 per unit. The firm currently sells 200 units of the product at $200 per unit. A manager is considering a repetitive focus to lower costs (and lower prices, thus raising demand). The costs of this proposed shop are fixed costs = $24,000 per year and variable costs = $10 per unit. If a price of $80 will allow 400 units to be sold, what profit (or loss) can this proposed new process expect? Do you anticipate that the manager will want to change the process? Explain.

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Definitions:

Organizational Power

The control and influence held within an organization to shape policies, decisions, and culture.

Substitutability

The degree to which one element can replace another in performing a particular function or achieving a specific outcome.

Impression Management

The process by which individuals attempt to control the perceptions others have of them, through the manipulation of social interactions and presentation of self.

Machiavellianism

A personality trait focusing on manipulativeness, deceitfulness, and a disregard for morality to achieve one's goals.