1. Assume your marketing people have a great plan to boost the unit sales. Unit

Question

1.       Assume your marketing people have a great plan to boost the unit sales. Unit sales rise to 500,000, but the plan requires your firm to drop the price to $29,000/unit and the marketing will cost your firm $300 million total. This $300 million is on top of the firm's original $5 billion fixed costs. Your firm still has $18,000 variable cost per unit. Your initial projection for profits before the marketing plan was to break even ($0 profits). What is your new projection for profits?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Explanation / Answer

Revenue = 500000*29000=$14500000000

Profit = Revenue - Cost = 14500000000 -18000*500000-300,000,000 -5000000000=$200,000,000

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.