NewApp Software Production is deciding whether to take on a new, large client, for whom additional hires will need to be made and another workspace will need to be rented. Estimates of the rents and facilities costs per year are $520,000, and the new developer's company must hire cost $62,000 per year including benefits. One new developer must be hired for each app produced per year. The company estimates that five developers will need to be hired based on initial estimates of the scope of work, which entails five completed apps currently priced at $ 127,000 each.

QUESTION(a) What is the minimum total value of the contract that NewApp must secure in order to break even? Use the algebraic approach.

( Round answer to decimal places, 125. )

ANSWER: Break-even Quantity ___________________ Apps

QUESTION (b) How should NewApp price each completed app to ensure a total profit contribution of $960,000?

ANSWER: PRICE _______

QUESTION #2 Harrison Hotels is considering adding a spa to its current facility in order to improve its list of amenities. Operating the spa would require a fixed cost of $22,220 a year. Variable cost is estimated at $37 per customer. The hotel wants to break even if 10,100 customers use the spa facilityWhat should be the price of the spa services? (Round answer to 2 decimal places, e.g. 15.25)

ANSWER PRICE OF SPA SERVICES __________

QUESTION #3

Perfect Furniture is a manufacturer of kitchen tables and chairs. The company is currently deciding between two new methods for making kitchen tables. The first process is estimated to have a fixed cost of $87,000 and a variable cost of $70 per unit. The second process is estimated to have a fixed cost of $110,000 and a variable cost of $60 per unit. Identify which ranges of product volume are best for each method . (multiple choice)

A) Process 1 for 0-1200 , process 2 for over 1201

B)Process 1 for 0-1400 , process 2 for over 1401

C)Process 1 for 0-1600 , process 2 for over 1601

D)Process 1 for 0-2300 , process 2 for over 2301

QUESTION #4

Easy - Tech Software Corporation is evaluating the production of a new software product to compete with the popular word processing software currently available . Annual fixed costs of producing the item are estimated at $ 125,400, and the variable cost is $ 9 per unit. The current selling price of the item is $ 31 per unit, and the annual sales volume is estimated at 48,700 units

. ( a ) Easy - Tech is considering adding new equipment that would improve software quality . The negative aspect of this new equipment would be an increase in both fixed and variable costs . Annual fixed costs would increase by $ 45,800 and variable costs by $ 2 . However, marketing expects the better-quality product to increase demand to 69,200 units.

QUESTION #4 : Should Easy-Tech purchase this new equipment and keep the price of their product the same?

ANSWER ___________

Answer rating: 100% (QA)

1 Breakeven Quantity 85 Apps Total Cost Fixed Costs Variable Costs Breakeven Quantity Total Cost Var... View the full answer