Luvmatics Plans to Produce a New Product -Use the Information in Table A

question 19

Multiple Choice

Luvmatics plans to produce a new product. Three different models are planned: the Regular, Large, and Jumbo. The fixed costs depend on which of two locations are used; in San Francisco the fixed costs would be $2.5 million per year, but in Tuttle the fixed costs would be $1.2 million. Sale prices and variable costs for the three models are shown in the table.
$$\begin{array} { | l | c | c | c | } \hline \text { Table A 1 } & & { \text { Model } } \\\hline \text { } & \text { Regular } & \text { Large } & \text { Jumbo } \\\text { Variable Cost} & \$ 5 \text { /unit }& \$ 7 \text { /unit } & \$ 10 / \text { unit } \\\text { Sale Price } & \$ 25 / \text { unit } & \$ 41 \text { /unit } & \$ 68 / \text { unit } \\\hline\end{array}$$
-Use the information in Table A.1.If executives decide to produce at the San Francisco plant but are nervous about sales numbers,which model would provide the greatest profit at the lowest sales volumes?

• A) Regular
• B) Large
• C) Jumbo
• D) It doesn't matter because the fixed costs are the same for the same site.

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Definitions:

Genetics

The branch of biology that studies genes, heredity, and variation in living organisms, explaining how traits are passed from parents to offspring.

Development

The process of change and growth throughout the life span, including physical, cognitive, and social-emotional aspects.

Uterine Wall

The muscular layer of the uterus that expands during pregnancy to accommodate a growing fetus and contracts during childbirth.

Implantation

The attachment of the blastocyst to the uterine wall, occurring at about day 6.