Problem

Blue Sage Mountain produces hinged snowboards. The price charged affects the quantity so...

Blue Sage Mountain produces hinged snowboards. The price charged affects the quantity sold. The following equation captures the relation between price and quantity each month:

Selling price = $530 — .2 X Quantity sold

In other words, if they wish to sell 500 boards a month, the price must be $430 ($530 — .2 X 500). Fixed costs of producing the boards are $70,000 a month and the variable costs per board are $90.

Required:

a. Prepare a table with quantities between 100 and 2,000 boards in increments of 100 that calculates the price, total revenue, total costs, and profits for each quantity-price combination.

b. Determine the profit-maximizing quantity-price combination.

c. Fixed costs fall from $70,000 a month to $50,000 a month. Should Blue Sage change its pricing decision?

d. Variable costs fall from $90 per unit to $50 per unit. Should Blue Sage change its pricing decision?

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search
Solutions For Problems in Chapter 2