Application: Chapter Problems
Lashawn Jefferson
MSPM 6130
Walden University
July 17th, 2016

Case: Prime Bank of Massachusetts Problem 1 (a) How many units need to be produced and sold to break even? Use both the graphical and algebraic approaches. Fixed Cost=40,000 Variable Cost=$45 per unit Selling Price=$100 BreakEven Quantity= Fixed Cost Selling price per unit –Variable cost per unit =40,000 $100-$45 =40,000 $55 Answer=728 units

(b) What would be the total contribution to profit from this product at this price? Selling Price=$80 Expected Sales (Q)= 2,000 units Contribution to Profits= Total Revenue – Total Cost =SP (Q)- (FC+VC(Q)) =$80 (2000) – (40,000+ 45(2,000) =160,000-(40,000+90,000) =160,000-130,000 Answer =30,000 (c) Will the pricing strategy of $100 per unit or $80 per unit yield a higher contribution to profit? Selling Price=$100 Expected Sales (Q)= 1,500 units Contribution to Profits= Total Revenue – Total Cost =SP (Q)- (FC+VC(Q)) =$100 (1500) – (40,000+ 45(1,500) =150,000-(40,000+67,500) =150,000-107,500 =42,500 Answer: Yes Problem 4 (a) How many printers does it have to sell to break even? BreakEven Quantity= Fixed Cost Selling price per unit –Variable cost per unit =500,000 $350-$200 =500,000 $150 Answer=3,333 units

(b) Describe the types of operations considerations that the company needs to consider before making the final decision. * Early and later stage of product life cycle operation * Delivery, flexibility, cost and quality operation * Resources grouped by function, and function arranged in a line operation * Make to stock, make to order or assemble to order prearranged in a line operation * Low and high operation
Problem 8 (a) How many units have to be