4. Pricing Policy for Lawn Mowers. Lawn King manufactures two types of riding lawn mowers. One...

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4. Pricing Policy for Lawn Mowers. Lawn King manufactures two types of riding lawn mowers. One is a low-cost mower sold primarily to residential home owners; the other is an industrial model sold to landscaping and lawn service companies. The company is in- terested in establishing a pricing policy for the two mowers that will maximize the gross profit for the product line. A study of the relationships between sales prices and quantit- ies sold of the two mowers has validated the following price-quantity relationships. 91-950-1.5p1 +0.7p2 where 92 = 2500+ 0.3p - 0.5p2 q = number of residential mowers sold 92 = number of industrial mowers sold P = selling price of the residential mower in dollars P2 = selling price of the industrial mower in dollars The accounting department developed cost information on the fixed and variable cost of producing the two mowers. The fixed cost of production for the residential mower is $10,000 and the variable cost is $1500 per mower. The fixed cost of production for the industrial mower is $30,000 and the variable cost is $4000 per mower. LO 1,2 a. Lawn King traditionally priced the lawn mowers at $2000 and $6000 for the res- idential and industrial mowers, respectively. Gross profit is computed as the sales revenue minus production cost. How many mowers will be sold, and what is the gross profit with this pricing policy? b. Following the approach of Section 8.1, develop an expression for gross profit as a 4. Pricing Policy for Lawn Mowers. Lawn King manufactures two types of riding lawn mowers. One is a low-cost mower sold primarily to residential home owners; the other is an industrial model sold to landscaping and lawn service companies. The company is in- terested in establishing a pricing policy for the two mowers that will maximize the gross profit for the product line. A study of the relationships between sales prices and quantit- ies sold of the two mowers has validated the following price-quantity relationships. 91-950-1.5p1 +0.7p2 where 92 = 2500+ 0.3p - 0.5p2 q = number of residential mowers sold 92 = number of industrial mowers sold P = selling price of the residential mower in dollars P2 = selling price of the industrial mower in dollars The accounting department developed cost information on the fixed and variable cost of producing the two mowers. The fixed cost of production for the residential mower is $10,000 and the variable cost is $1500 per mower. The fixed cost of production for the industrial mower is $30,000 and the variable cost is $4000 per mower. LO 1,2 a. Lawn King traditionally priced the lawn mowers at $2000 and $6000 for the res- idential and industrial mowers, respectively. Gross profit is computed as the sales revenue minus production cost. How many mowers will be sold, and what is the gross profit with this pricing policy? b. Following the approach of Section 8.1, develop an expression for gross profit as a