The Manager of Calypso,Inc

question 41

Essay

The manager of Calypso,Inc.is considering raising its current price of $30 per unit by 10%.If she does so,she estimates that demand will decrease by 20,000 units per month.Calypso currently sells 50,000 units per month,each of which costs $25 in variable costs.Fixed costs are $180,000.
a.What is the current profit?
b.What is the current break-even point in units?
c.If the manager raises the price,what will profit be?
d.If the manager raises the price,what will be the new break-even point in units?
e.Assume the manager does not know how much demand will drop if the price increases.By how much would demand have to drop before the manager would not want to implement the price increase?

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Definitions:

Management Team

A group of individuals at the executive level who are responsible for overseeing the operations and strategic direction of an organization.

Network Density

refers to the ratio of actual connections in a network to the maximum possible connections between nodes, indicating how closely knit the network is.

Solidarity

Unity or agreement of feeling or action, especially among individuals with a common interest; mutual support within a group.

Cohesiveness

The quality of being united, working efficiently together within a group or organization to achieve common goals and objectives.