Complete the following table of basic calculations. For Percent Contribution Margin, use (P- MC)/P. Round to table standard.
Price Quantity Demanded Total Revenue Marginal Revenue Variable Cost Total Cost Average Variable Cost Marginal Cost Profit Percent Contribution Margin
18 600 10800 5210 5710 8.68 5090
17 a 11900 11 b 6140 8.06 4.30 5760 0.75
16 800 12800 9 6135 c 7.67 4.95 6165 d
15 900 13500 e 6700 7200 7.44 5.65 6300 0.62
14 1000 14000 5 7335 7835 f 6.35 6165 g
13 1100 14300 3 8060 8560 7.33 h i 0.44
j 1200 14400 1 8900 9400 7.42 8.40 5000 0.30
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
You are serving as the chair for your community’s annual wellness campaign. A key event is the annual Walk 3k, Run 10k, Ride 20k event. The event is staged entirely by volunteers, and the goal is to attract community-wide awareness of getting active as a key step to wellness. In other words, the goal is not to raise money but to prompt awareness. As the chair you set a financial goal to break even on the one and only cost of the event: a fitness bag with the community seal and the event motto, “I AM ON THE RIGHT TRACK!”
Bags/
Participants Fixed Cost Variable Cost Total Cost Average Variable Cost Marginal Cost Total Revenue wt Price $20 Marginal Revenue Total Profit
0 1700 0 1700 0 -1700
100 1700 500 2200 a 3a 2000 20 -200
200 1700 1200 2900 b 3b 4000 20 1100
300 1700 2700 4400 c 3c 6000 20 1600
400 1700 5200 6900 d 3d 8000 20 1100
500 1700 9000 10700 e 3e 10000 20 -700
600 1700 15000 16700 f 3f 12000 20 -4700
700 1700 23800 25500 g 3g 14000 20 -11500
800 1700 36800 38500 h 3h 16000 20 -22500
900 1700 55800 57500 i 3i 18000 20 -39500
1000 1700 83000 84700 j 3j 20000 20 -64700
Complete the calculations for Average Variable Cost:
a)
b)
c)
d)
e)
f
g)
h)
i)
j)
Continue with the table and complete the calculation for Marginal Cost:
Bags/ Participants Fixed Cost Variable Cost Total Cost Average Variable Cost Marginal Cost Total Revenue wt Price $20 Marginal Revenue Total Profit
0 1700 0 1700 0 -1700
100 1700 500 2200 a 3a 2000 20 -200
200 1700 1200 2900 b 3b 4000 20 1100
300 1700 2700 4400 c 3c 6000 20 1600
400 1700 5200 6900 d 3d 8000 20 1100
500 1700 9000 10700 e 3e 10000 20 -700
600 1700 15000 16700 f 3f 12000 20 -4700
700 1700 23800 25500 g 3g 14000 20 -11500
800 1700 36800 38500 h 3h 16000 20 -22500
900 1700 55800 57500 i 3i 18000 20 -39500
1000 1700 83000 84700 j 3j 20000 20 -64700
3a)
3b)
3c)
3d)
3e)
3f)
3g)
3h)
3i)
3j)
Refer to the tables in Questions 2 and 3 to identify which of the below is correct. Select all statements that are true.
At the breakeven point TR – TC = 0
The profit maximizing quantity of participants/bags is MR ≥ MC 300
The profit maximizing quantity of participants/bags MR ≤ MC 400
Using Qb = F/(MR – AVC) the breakeven quantity of participants/bags is approximately 113 to 115
You make a lightweight compact foldable windbreaker. Your brand, Desert Wind Jackets, is well established in the Southwest. In a drive to broaden your appeal and open new markets, you have rebranded under the simple logo DWJ. The strength of your brand, loved by your customers in the Southwest, means you have a price elasticity of demand -2.76. Market research indicates that in the Upper West, where there is some knowledge of your brand, the price elasticity of demand is -3.50. In New England, where you are least known, it is estimated that the price elasticity of demand will be quite high, -5.76. Your marginal cost per jacket is $198.33.
a) What price will you charge in your southwestern region?
b) What price will you charge in your upper western region?
c) What price will you charge in your New England region?