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:

Infants

Very young children, especially those from birth to one year of age, experiencing rapid physical and cognitive development.

Neonates

Newborn infants, especially within the first month after birth, emphasizing the earliest phase of life outside the womb.

Cephalocaudal Development

A pattern of growth where development proceeds from the head downward through the body.

Cerebellum

The area of the lower, back part of the brain involved in coordination and balance.