Should you proceed or back out of this transaction

Assignment Help Business Economics

Reference no: EM13153453

Berditzman Shoe C. will produce a custom-style shoe if the order size is large enough to provide a reasonable profit. For each custom-style order the company incurs a fixed cost of $1,000 for the production setup. The variable cost is $30 per pair and each pair sells for $40.

a. Does this production setting exhibit economies or diseconomies of scale? Justify your answer.

b. What is the break-even quantity level?

c. Suppose that they have decided to accept a custom-style order that has sufficient volume to exceed break-even and have already set up for production. The customer now indicates that they are only willing to pay $31.99 per pair of shoes.

i.What is the economic profit/loss associated with this order if you proceed?

ii.Should you proceed or back out of this transaction?

Reference no: EM13153453

Questions Cloud

Account for inventory at year-end : What inventory system do you use and why? What are its advantages and disadvantages? What activities should you perform to correctly account for your inventory at year-end? Why is it important to track inventory? What does this information tell you a..

Find the hourly rate for cars entering the tunnel : What is the hourly rate for cars entering the tunnel? Given rate is per minute therefore to get the hourly rate we need to x 60. Hourly rate -= 0.5 x 60 = 30 cars/hour.

Produce a gross margin budget using information : Supplementary feed is valued at $160 per tonne for 25 tonnes each year. Marketing and transport costs $5 per head and this is only charged on animals sold from the farm. Industry levies are $4 per head per year for each animal sold.

In what ways might a microorganism ability to grow : In what ways might a microorganism's ability to grow at low or high temperatures be reflected in the structure or expression of various growth related proteins?

Should you proceed or back out of this transaction : What is the economic profit/loss associated with this order if you proceed? Should you proceed or back out of this transaction?

Who is heterozygous for the eye color trait : A person who is homozygous recessive for the eye color will have what possible allele(s) in their gametes?

Expense at the time of purchase : Is the purchase of equipment treated as an expense at the time of purchase? Why or why not?

How many heifers to carry through the system : The farmer wants you to work out how many heifers to carry through the system so that he can replace the cull cows and

What is its density if it stays as one piece : The Bacteria were at different stages in their cycle of doubling their DNa. The authors allowed time for one generation. Wouldn't some DNA molecules be only partly made?

User Account

All Pages