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:

Tuberculosis

A contagious bacterial infection caused by Mycobacterium tuberculosis that primarily affects the lungs, but may spread to other organs.

Hispanic

Relating to, characteristic of, or derived from the people, culture, or languages of Spain, Portugal, or Latin America.

Pacific Islander

A person originating from any of the three ethnogeographic groupings of Oceania: Micronesia, Melanesia, and Polynesia.

Chronic Illness

A long-standing, persistent health condition that often requires ongoing medical attention or management.