The business I choose to start is a piggy bank designing company. My company makes over 100 different styles and textures of piggy banks. To produce our most popular, style the matte black stainless steel piggy bank, it cost $5 to acquire all the material it will take to make it. The market value set for a single piggy bank is set at $11. My total fixed cost including rent and utilities for my business is $4,000 per month. My cost function is C(x)= 4,000+11x. In order to get the linear cost function, I take the equation C =mx+b. There is an option to buy a piggy bank deluxe box which includes 100 piggy banks for $650. This would place the marginal cost at $5, C is equal to the total cost and x is the number of items. The slope m is the marginal cost and b is the fixed cost, ending with the equation C(x)= 5x+150.
Next, with the price-demand, x=f(p)=12000-75p, to determine the feasible range
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My revenue would be 33,000 per month if I am producing 3,000 units of piggy banks. Lastly My profit would be around 360,000 a month if I continued to produce 3,000 units of piggy banks on a continuous basis. My marginal cost and revenue at 3,000 if I took the derivative of both equations. Would be the marginal cost function C’(x)=11, meaning it would cost me an extra $11 to produce another piggy bank. The derivative of the marginal revenue function is if I plugged in 3,000 to the original function of R’(x)=160- 1/75x would equal $120. Which would mean that when 3,000 units are produced the change in revenue would be $120. Using the price -demand function at my product would sell for $120 every month. The price elasticity of demand function is (q(p)/p)*(dP/dQ) which would covert to my function as E(p)= -p(120p)/4000-120p. This would cause my company to be elastic because if I change my quantity my price will fluctuate. When profit is maximized, marginal revenue is
Next I will need to find out the yearly net income from the investment. This will be gross ticket sales minus the total expenses. Deer Valley expects 300 skiers per day for 40 days at $55.00 per ticket, giving us $660,000 in ticket sales. In order to figure the total expenses I need to separate the fixed and variable expenses. Fixed expenses are those that will be there everyday the lodge is open regardless of the number of skiers. The Lodge is open 200 days per year and the cost of running the new lift is $500 per day for the entire 200 days giving us $100,000 in fixed costs. Variable costs are the expenses based on the number of customers. There is an additional $5 expense per skier per day associated with the new lift. If there are 300 skiers multiplied by $5 each multiplied by the 40 days that they are expected to be on the lift, we will have $60,000 in variable expenses. Fixed costs of $100,000 plus the variable costs of $60,000 will give us $160,000 in total expenses. The gross ticket sales of $660,000 minus the total expenses of $160,000 give us a yearly net income of $500,000.
The 3 percent decline in sales causing a 21 percent decline in profits can be attributed to the identification of the accounting concept of operating leverage. Operating leverage is what business managers apply to boost small changes in revenue into sizable changes in profitability. Fixed cost is the force managers use to attain disproportionate changes between revenue and profitability. Therefore, when all costs are fixed every sales dollar contributes one dollar toward the potential profitability of a project. Once sales dollars cover fixed costs, each additional sales dollar represents pure profit. A small change in sales volume can significantly affect profitability (Edmonds, Tsay, & Olds, 2011). So, therefore, if sales volume increases,
Under the ABC method, the Geoffrey doll has a very high contribution margin. It would be beneficial for G.G. Toys to increase their advertising campaign to focus on the Geoffrey doll to increase the sales margin. It would also be beneficial for the selling price of the specialty doll #106 to be increased as its true contribution margin was revealed through the ABC method. The contribution margin of the cradle remains consistent, very high, as it is the only product being manufactured in the Springfield plant. Since dolls are often sold with cradles as a package it would be profitable for G.G. Toys to consider pairing the Specialty doll #106 with a cradle in an effort to increase the profit margin of this doll. Bundling products will increase the average sales price for every order. Looking ahead, I recommend that G.G. toys continue in their market research and analysis of each product which will help them to plan for future demand. It would also be beneficial to stay informed of competitors and their pricing. Knowing the competition will help G.G. Toys to understand exactly what their competitive advantages are and help to target their efforts in that marketplace. This will increase their return on their marketing investment and increase their sales yields (Grev,
A couple of Squares has a limited capacity for which to produce their products and smaller companies tend to have larger fixed costs than bigger companies. Therefore, A Couple of Squares must maximize profits in order to ensure that they will stay in business. A profit-oriented pricing objective is also useful because of A Couple of Squares’ increased sales goals. A Couple of Squares increased their sales goals due to recent financial troubles. Maximizing profits is the easiest way to meet these sales goals due to the fact that A Couple of Squares has limited production capacity. The last key consideration favors a profit-oriented pricing objective because A Couple of Squares offers a specialty product. A specialty product often has limited competition, therefore can be priced on customer value. Pricing at customer value will maximize profits as well as customer satisfaction. A Couple of Squares’ lack of production capacity, increased sales goals, and specialty product favor a profit-oriented pricing
The death of Piggy and the shattering of the conch share a similar symbolic value. While Piggy represented rationality and logic, the shell represented social order and power. The fact that their demise occurred at the same time was necessary in order for the last strings of civilization to break, and to finally let savagery take over what's left of the group. If either Piggy or the shell had survived solely, the results would have been different. Both were important to Jack’s power, and the destruction of only one could've changed the end situation and possibly have spared them some time before it got catastrophic. The moment after Piggy and the conch were struck by the rock, the entire atmosphere of the island changed. Jack placed himself
In the 1890’s, somewhere in England “The Story of the Three Little Pigs” was created. In this fairy-tale, an old sow sends out three pigs to find their wealth. Firstly, while establishing their wealth, the pigs came across this man that supplied them with material to build their houses. Therefore each pig begins to build their own house, either out of straw, sticks, or stones. The pigs soon after came across the wolf and he blows down the first two pigs houses and eats the pigs. Secondly, there is one pig left, but his house is too strong to blow down. The wolf then tries to outsmart the pig by sending him to different locations to meet him instead of trying to blow down his house. On the other hand, the pig ends up outsmarting the wolf by showing up an hour early to all the destinations. Lastly at the final destination, the fair, the pig scares the wolf by rolling down a hill in a butter churner out of fear of seeing the wolf coming towards the fair. In the end, the wolf got fed up with the pig and declared to eat the pig by climbing through the chimney. The pig once again outsmarts the wolf by putting a pot of boiling water under the chimney and the wolf ends up falling in. The pig, then proceeded to eat the wolf. The third pig ate the wolf as a survival tactic when the wolf declared to eat the pig by using his wits to outsmart
The price elasticity of demand is a measurement that illustrates the responsiveness to changes in price of the demand. For example, it is specifically related to the simulation in regards to shifting the price up and measuring how much the demand falls. It is a percentage change in quantity. The presence of substitute goods, such as detached housing, has the effect of increasing the price elasticity of the demand. Housing is a necessity, which helps to hone down the elasticity. The revenue is maximized when the elasticity is equal to one.
Piggy stood for intelligence which every civilization needs, when he died it showed that savagery had completely taken over civilization. In chapter ten Piggy said, “You were outside. Outside the circle. You never really came in. . . . You ought to know Ralph.” (157). Piggy was the only boy who attended the feast, but didn’t help in attacking and killing Simon. This quote demonstrates that his morals are very intellectually based. Furthermore in chapter eleven Piggy said, “Ralph – Remember what we came for. The fire. My specs.” (177). Another quote Piggy said was, “I got this to say . . . . Which is better – to be a pack of painted Indians like you are . . . . to have rules and agree, or to hunt and kill?” (pg.180). The two quotations show
During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. Assume that you are an assistant to Leigh Jones, the financial vice president. Your first task is to estimate Harry Davis’s cost of capital. Jones has provided you with the following data, which she believes may be relevant to your task.
When demand is elastic as with Coca Cola products price changes affect total revenue. When the price increases revenue decreases and when the price decreases revenue increases. For Coca Cola if they notice a decrease in revenue they would offer products at a discount to increase revenue. They do this quite often with sales such buy 2 20 oz. bottles for $3 instead of the normal $1.89 each price
With John and Lorraine meeting on the bus, there was no room for any mortification to be felt during any time in their relationship. It all began when John became known as the “bathroom bomber,” for setting off small explosives during the afternoon in school. While causing mischief was John’s hobby, Lorraine’s included writing, and expressing herself through literature. Due to the two young ones sharing their eighth period class together, their personalities instantly came together and formed a friendship like no other. Through their telephone game with Dennis and Norton, John and Lorraine came across what we know as The Pigman, or Mr. Pignati. Having Mr. Pignati’s wife in supposedly California, he was longing for someone to talk to, and jumped
In the short-run profit maximization would lead to supernormal profits. In the long-run with there being freedom to enter the market a leftward shift of the demand curve (AR) and marginal revenue (MR) curve. This is where the demand curve is tangential to the LRAC curve as seen in figure
Every company has some kind of Revenue and they all have costs that are associated with running the company. It is also true that if a company wants to increase their Revenue, their costs will increase too. It is every company’s goal to maximize revenue and either through Production or Services, and minimize cost. These things are easy to figure out, but actually identifying the production and figuring out how it will increase or decrease with change is very difficult.
One method that Toyota can consider is using the price elasticity of demand to determine whether to increase or decrease the sale price of their automobiles. The responsiveness or sensitivity of consumers to a price change is measured by a product's price elasticity of demand (McConnell & Brue, 2004). Market goods can be described as elastic or inelastic goods as change in quantity demanded for that good. If demand is elastic, a decrease in price will increase total revenue. Even though a lower price would generate lower sales revenue per unit, more than enough additional units would be sold to offset lower price (McConnell & Brue, 2004). In a normal market condition, a price increase leads to a decreased demand, and a price decrease leads to increased demand. However, a change in income affecting demand is more complex.
Costs, revenue and breaking even INTRODUCTION In this part of the coursework I will be looking at costs, revenue and breaking even. To do this we will have to work out our fixed costs, variable costs, expected total revenue, the amount of cars needed to break even and whether we make a profit or loss. A Business Plan Material and Equipment Fixed costs All of these materials and supplies will be bought from a local D.I.Y shop. * 4 sponges incl. 1 revolving sponge: - £32 * 4 buckets: - £10 * 4 scrubbing brushes for wheels: - £4 * Advertising Leaflets: - £5 * 4 chamois leather: - £12 Total fixed costs: - £63 Variable costs The washing up liquid can be bought from any local shop, but the water will be supplied from each of us from our homes although we wont be actually paying for the water it is included for business purposes.