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# You are working on an analysis of your company's current cost structure reviewing the various fixed and variable costs within your firm. Your...

You are working on an analysis of your company's current cost structure reviewing the various fixed and variable costs within your firm. Your objective is to maximize your firm's profit. In reviewing your current sales you are confident that you will reach a sales level of 40,000 units. Your fixed costs are presently $500,000 with a variable cost per unit of $25 per unit and a sales price of $43 Your options are:a. Increase your fixed costs by $50,000 which will decrease variable costs by $8 per unit.b. Sell off $100,000 of your fixed costs which will increase your variable costs by $12 per unit.c. Decrease your sales price by $5 in order to increase sales by 5,000 units.Which of the above alternatives would your choose to increase profits?2. A firm is considering three capacity alternatives: A, B, and C. Alternative A would have an annual fixed cost of $150.000 and variable costs of $28 per unit. Alternative B would have annual fixed costs of $145,000 and variable costs of $19 per unit. Alternative C would have fixed costs of $100,000 and variable costs of $15 per unit. Revenue is expected to be $50 per unit.a. Which alternative has the lowest break-even quantity?b. Which alternative will produce the highest profits for an annual output of 40,000 units?c. Which alternative would require the lowest volume of output to generate an annual profit of $100,000?3. Using the below information in a linear programing problem maximize the profit for product A and B.Maximize profit $80A + $60BSubject to the following constraints:15A+10B < 120019A+5B < 1000A,B > 04. A manufacturer has experienced the following monthly demand for one of their products.Actual demand (in cases)15002860295034903000a. Using a three month moving average, what would the forecast and MAD have been for July?b. What would the three-month weighted moving average (using .4, .4, .2) and MAD have been for July? What would the MAD be using a regression?c. Which forecasting method would you recommend? Why? The “K” Company has a chain of 12 stores in a Southeast. Sales figures and profits for the stores are given in the following table. Obtain a regression line for the data and predict profit for a store assuming sales of $20 million. YProfits$.20.19.15.17.20.18.21.25.28.31.23.206. A manufacturer of mole and gopher poison has experienced the followingmonthly demand for an environmentally sound pesticide poison.Actual demand (in cases)640840770950875a. Using a Average method, what would the forecast have been for July?b. What would the unweighted three-month simple moving average have been for July?c. Which forecasting method would you recommend? Why? 7. A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.a. What volume per month is required in order to break even?b. What profit would be realized on a monthly volume of (1) 61,000 units? (2) 87,000 units?c. What volume would be needed to obtain a profit of $16,000 per month?The Bingo Hamburger Company has a chain of 12 stores in a large city. Sales figures and profits for the stores are given in the following table. Obtain a regression line for the data and predict profit for a store assuming sales of $10 million.YProfits$.15.10.13.15.25.27.24.20.27.44.34.179. The Bozo Company has decided to do a breakeven analysis on their production process to determine if they could reduce their breakeven point. The following criteria apply:$7525$400,000a. What is the current breakeven cost?b. What would happen to the breakeven point if we lower our fixed costs by $100,000 but increased our variable cost by $5 per unit?c. What would happen to the breakeven point if we increased our fixed cost by $200,000 and decreased our variable cost by $11 per unit?d. Which of the above cost structures would you use if you were certain to have 40,000 units sold?10. Minimize the following problem:Z = 2A + 4B4A + 6B >= 1202A + 6B >= 72B >= 10>= means less than or equal to.