The marketplace is saturated with modems

Assignment Help Macroeconomics

Reference no: EM1332937

Variable costs of producing 100,000 units

You are the general manager of TU modems Inc., and your accounting department has provided you with the following information about the total cost of producing three potential quantities of a commercial-grade modem:

100,000 Units 150,000 Units 200,000 Units
Materials $ 250,000 $ 375,000 $ 500,000
Depreciation $ 900,000 $ 900,000 $ 900,000
Labor $ 10,000 $ 15,000 $ 20,000
Total costs $ 1,160,000 $ 1,290,000 $ 1,420,000

The market is saturated with modems, and your sales department has been able to identify only one potential buyer of your modems. This customer has numerous alternative options and as a result is only willing to pay $300 per modem for an order of 100,000 modems. You must decide whether to sign a contract under these terms or simply shut down your operations. What is your optimal decision?

The method of HOW to solve this is as important to me as the answer.

Reference no: EM1332937

Questions Cloud

Illustrate what do you think would be the effect : Illustrate what do you think would be the effect of increases/decreases in the dollar's exchange value on the firm's profitability.

Explain what is your future vision of the internet : Explain what is your future vision of the internet and how it will play into our lives? Feel free to be creative and have some fun with it

Make a gui that will create the objects : sketch a GUI that will create the objects and provide access to each object's processing methods.

Initial orientation for expatriates includes : Human Resource Management - sample questions - Can you help me understand these questions?

The marketplace is saturated with modems : The marketplace is saturated with modems, and your sales department has been able to identify only one potential buyer of your modems.

Explaining result of the manipulation of financial reporting : At the most basic level, Enron, Worldcom, and other scandals were the result of the manipulation of financial reporting.

How to create an online account : A database would store the student's login name, class list, and number of registered credits. Furthermore, the database will store the administrator's login information and the classes listed in the online catalog. Add error handling to the appli..

Explain what area of e-business is of interest : Explain what area of E-Business is of interest to you and Has it changed your perception of where technology is headed

Campus print shop is assume of purchasing a new : Campus Print Shop is assume of purchasing a new, modern copier that automatically collates pages. The machine would cost $22,000 cash.

User Account

All Pages