This is a multi-part question that, for grading purposes, will be consolidated into a single response. Note that the answers per se will not be graded, but rather the proofs given to support those answers. Be sure to make those proofs clear and organized.

Ball Inc.. has fixed costs of $3,800,000 and variable costs of $50 per unit. The firm's marketing department estimates that it faces the following demand schedule displaying the number of units it can sell at various prices:

$130 72,000

$120 90,000

$110 106,000

$100 120,000

Question 1: Which price is optimal?

There is an opportunity to change materials used in the production process. The new materials would add $6 per unit in variable cost but would simplify production in a way that would reduce fixed costs by $520,000 and labor costs (variable) by $1 per unit.

Question 2: Should the company switch to the new materials?