Answer:
9,400 units
Explanation:
The breakeven point is the number of units that must be sold for the company to make neither a loss nor a profit. A target profit is the net of the sales less the sum of the fixed and variable expenses. The contribution margin is the difference between the sales and variable cost.
Sales per unit = $210,000/7000 = $30
Variable cost per unit = $136,500/7000 = $19.50
Let the number of units to be sold to achieve the profit target be x
30x - 19.5x - 67200 = 31500
10.5x = 98700
x = 98700/10.5
x = 9,400 units
Answer:
This situation is an example of cross Price elasticity of Demand
Explanation:
If change in Price in Rental Company A doesn't necessitate change in prices in Rental companies B.C.D.E & F
Then the products A has on offer are not close substitutes to the rival companies
However where Rental company G lowers his price and it immediately triggers a Price reduction in Companies B to F, then obviously they offer similar products that are close substitutes and serve similar segment or channel of the Market Size. Thus failure to lower their Price will automatically see Customers rent cars more from Company G.
This situation is an example of cross Price elasticity of Demand
Answer:
A. 12 units
B. 77 units
Explanation:
A. Calculation to determine What safety stock level do you recommend for BX-5
Using this formula
Safety stock = Z * Standard deviation of demand
Let plug in the formula
Safety stock= 1.65* 7
Safety stock= 11.55 units
Safety stock=12 units (Approximately)
Therefore The safety stock level recommended for BX-5 is 12 Units
b. Calculation to determine What is the appropiate reorder point
Using this formula
Appropriate re-order point = Mean lead time demand + Safety stock
Let plug in the formula
Appropriate re-order point = 65 + 12
Appropriate re-order point = 77 units
Therefore the appropiate reorder point will be 77 units
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