A Product Is Currently Made in a Process-Focused Shop,where Fixed

question 57

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 cost = $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:

Time Constraints

The limitations on the amount of time available to complete a task or project.

Rational Model

A decision-making approach that assumes individuals make decisions based on complete information, weighing all alternatives to choose the most satisfactory option.

Consistent System

A system where all parts work together without contradiction, ensuring stability and predictability in its operations.

Preferences

Individual likes or choices that guide behavior and decision-making, often influenced by personal experiences, cultural factors, and biological predispositions.