The Precision Writing Instruments Company Makes Two Pen Designs -

question 195

Multiple Choice

The Precision Writing Instruments Company makes two pen designs - the Cordova design and the Savannah design.These data apply,regardless of which of two pen designs is being implemented.Materials cost per pen is $6.Labour cost per pen is $5.Production overhead is $1,000,000.Advertising and promotion is $1,000,000.Marketing research has estimated the following demand functions for the next year of sales for the two pen designs where Q represents demand in thousands and P represents price.For the Cordova design,Q = 150 - 2.5P.For the Savannah design,Q = 175 - 2.1P.A price skimming strategy is proposed for the Savannah design and a price of $40 is selected.What will be the profit or loss for the first year?

• A)$600,000 loss
• B)$639,000 profit
• C)$994,000 profit
• D)$1,639,000 profit

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Definitions:

Carbon-Carbon Double Bond

A chemical bond between two carbon atoms involving four bonding electrons, the basis of alkenes' structure and reactivity.

Geometry

The branch of mathematics concerning the properties and relations of points, lines, surfaces, solids, and higher dimensional analogs.

Alkene

Unsaturated hydrocarbons with at least one double bond between carbon atoms, exhibiting properties like addition reactions.

(Z)-2-Chloro-4-Ethylhex-2-Ene

A geometric isomer of an organic compound characterized by a specific arrangement of atoms, including a chloride and ethyl group.