1.In this exercise you are trying to maximize profits (or minimize losses). Don't forget to answer the questions as well as create the tablw

A w Assignment2(1) (2) Q . Search in Document Home Insert Design Layout References Mailings Review View '+ Share Arial 12 - A - A Ad A AaBbCcDdE AaBbCcDdE AaBbCCD AaBbCcDdE AaBb( AaBbCcDdEe AaBbCcDdE AaBbCcDdE Paste I UV abe X2 X A L. A. Normal No Spacing Heading 1 Heading 2 Title Subtitle Subtle Emph Emphasis Styles Pane A company produces high quality hoodies. The cost per hoodie is: Learning Outcomes Materia $10 The learner will be able to: Thread $1 Given a specific business situation, calculate the point of profit maximization in the short Decorations on the hoodies $5 term. Shipping and handling $1 Show how the profit maximizing firm responds in the long run as the costs of one or more of the inputs changes Each worker earns $27,000 annually in salary and benefits. The number of workers changes based on the level of production Submission Instructions The artist who creates the designs on the hoodies is paid $12,000 annually. Senior 1. Complete the exercises below, answering all questions. In this exercise you are management are paid a total of $176,000 annually. Other annual costs are: trying to maximize profits (or minimize losses). Don't forget to answer the questions as well as create the table. Taxes and Insurance $14,000 2. Submit only one Word document with all your answers labelled and in the correct Utilities $40,000 order. Rent $29,500 3. Do not include the questions, only your answers. Miscellaneous Overhead Expenses $15,500 4. Include a cover page with your name, student number, course name and assignment name. 5. PDF and Excel documents are not acceptable and will not be marked. 6. Submit the assignment using the assignment submission function only. The The following production is possible: assignment is automatically submitted to SafeAssign, which checks for plagiarism and copying. No. Of 0 2 3 4 5 6 7 7. Emailed assignments will not be marked. Workers The assignment is due on the date specified on the Critical Path. Late No. Of 7,000 16,000 25,000 33,000 40,000 42,000 41,000 submissions will lose one mark per day, and will not be accepted after 7 days. Hoodies that can be Marks will be deducted if you do not follow these instructions. made 1. Using all the costs provided, complete the following table and answer the questions. It would be easier if you set this up in an Excel spreadsheet. When you are done, you must submit it as a Word document with your answers. You will use this table to answer the rest of the questions. (3 marks) Your first step is to identify which are fixed costs and which are variable costs. All costs need to be included. If you will have to keep paying the cost whether you produce 0 units of the product or 10,000 units, then it is a fixed cost. In the short run you have to keep paying it. In the long run you may be able to change these fixed costs. A variable cost changes based on how much of the product you produce. But the variable costs may not change all at the same time. Page 1 of 5 1019 Words OF English (CAN) E Focus + 108%w Assignment2(1) (2) Q . Search in Document Home Insert Design Layout References Mailings Review View '+ Share Arial 12 - A - AV A A AaBbCcDdE AaBbCcDdE AaBbCCD AaBbCcDdE AaBb( AaBbCcDdEe AaBbCcDdE AaBbCcDdE Paste BI UT abE X2 X A L A . = = = = 1 0 .. Normal No Spacing Heading 1 Heading 2 Title Subtitle Subtle Emph Emphasis Styles Pane MC For questions 5 to 8, your table, for each question should have the following information in it: # of workers O TVC AVC AFC TC ATC ATC AQ # of PxQ price FC + VC Profit or TVC / Q FC/ Q FC + TC/Q Workers Loss VC TR AR 0 5. If the price per hoodie were fixed at $35, what would you do? Remember, in the short run you can't alter fixed costs, you can just decide where to set the level of 7000 production. Your costs, # of workers, and quantities are the same as you have already calculated, so when filling in these tables for Q 5, 6, 7, and 8, use the same costs. You need to calculate total revenue and profit or loss for each level 2 16000 as you are given the average revenue. Remember to state both what level of production you would choose and what dollar profit you would make. Explain why you chose the level you did. Your table should have following 3 25000 information in it, for each level of production. (1 mark) 6. If the price per hoodie were fixed at $26.50, what would you do in the SHORT RUN? Again, remember that you have to keep paying your fixed costs in the 33000 short run. Fill in the table completely and state what level of production you would use. Remember to state both what level of production you would choose and what dollar profit you would make. Explain why you chose the level 40000 you did. (1 mark) 7. If the price per hoodie were fixed at $20, what would you do in the SHORT RUN? Fill in the table completely and state what level of production you would use. 6 42000 Remember to state both what level of production you would choose and what dollar profit you would make. Explain why you chose the level you did. (1 mark) 7 41000 2. Why does B. If marketing data, shown below, estimated that you could sell the following quantity decrease when the 7" # of 7000 16000 25000 33000 40000 42000 41000 worker is added? hoodies What is the term for this effect? (1 mark) Price $40 $38 $36 $33 $30 $28 $26 3. What is the lowest price you would be willing to start producing this new product? (AR) Be precise. Don't round up to the nearest dollar. (1 mark number of hoodies at the prices indicated, how many hoodies would you produce 4. If you were already committed to the fixed costs, how low could the price per and what would be your profit? Fill in the table completely and state what level of hoodie fall before you would consider shutting down production? Remember, in production you would use. Remember to state both what level of production the SHORT RUN, you have to keep paying your fixed costs whether you produce you would choose and what dollar profit you would make. Explain why you any hoodies or not. If you can cover your variable costs, then anything over that chose the level you did. (1 mark) will reduce your fixed costs. You may be losing money in the short run but you are losing less money (1 mark) Page 3 of 5 1019 Words English (CAN) E Focus + 108%