Question

Assume that MTA Sandwiches sells sandwiches for $2.85 each. The cost of each sandwich follows:

Answer 1

Answer:

a. profit is lower

b. lowest price $2.29

Step-by-step explanation:

a. We have to analyze how this especial order affect the profit of the company

Profit = Revenue- Total cost = P(x) =(Px * Q)-(FC + vc*Q)

Regular production profit= $2.85 x  18,400 units -$2.60  x  18,400 units=

Regular production profit=4600

Production with special order= (P1 * Q1)+(P2 * Q2)-(FC + vc*Q)

P2=  price of special order

Q2= quantity of special order

Q= Q1 +Q2

Production with special order= (P1 * Q1)+(P2 * Q2)-(FC + vc*Q)= $2.85 x  18,400 units +$1.85 x  800 units - $18,400- $1.60 x 19600=

Production with special order= 51888 +1480- $18,400- 30720

Production with special order= 4.248‬

b.Production with special order= (P1 * Q1)+(P2 * Q2)-(FC + vc*Q) =4600

=51888 +(P2 * 800)- $18,400- 30720 =4600

=(P2 * 800)= 4600- 51888 + $18,400+30720

P2=1.832/800 = 2,29