Using the Following Information:
Drill Quest, Inc $Q = 1,200 - 0.05 P$

question 26

Multiple Choice

Using the following information:
Drill Quest, Inc. manufactures drill bits for the oil industry. Drill Quest uses cost-plus pricing to set the price of its bits. Currently Drill Quest applies a 50 percent markup on average total cost. Average variable cost of producing bits is constant and equal to $6,000 per bit. Total fixed cost at Drill Quest is $550,000. DrillQuest currently produces 690 bits. Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits) :
$Q = 1,200 - 0.05 P$
-Using cost-plus pricing, Drill Quest prices its bits at $______________ per bit.

• A) $10,195
• B) $12,175
• C) $797
• D) $6,000
• E) $6,797

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Definitions:

Initiation Of Actions

The act of beginning or starting something, often referring to the commencement of specific behaviors or activities.

Ability To Contract

The legal capability to enter into a binding agreement, typically requiring parties to be of certain age and mental capacity.

Ethnic Group

A community or population made up of people who share a common cultural background, heritage, language, or lineage.

East Indian

A term often used to refer to people from or with ancestry in the Indian subcontinent, particularly in the context of migration to countries outside of South Asia.