Dr. Warped, a deranged yet creative and entrepreneurial scientist, was in his lab one day when he came up with a concoction that he believed would grow hair on people experiencing hair loss. He decided to immediately create trial consisting of 50 people to confirm his beliefs. Unfortunately for Dr. Warped not one person grew even a single strand of hair, the only noticeable effect was that all 50 people experienced some strange hallucinations which were not totally unpleasant for them. At first he was extremely disappointed, but his disappointment quickly turned into confusion when several people in the study approached him and inquired about getting a yearly supply of the drug. He then came to the realization that the drug might have some profit making potential even if it couldn't grow hair. So Dr. Warped decided to try his luck. But before taking a chance in this new venture, he decided to do some modeling to see how profitable his new line of work would be.

Dr. Warped knows that the venture will just last 6 months, from July to December, in order to minimize the chance of being caught and sent to jail. He believes the customer base will grow to 50 during the first month and increases 50% every month as more people become familiar with the drug. On average, each customer will make 2 purchases the first month with a 25% increase every month after that. The drugs will be sold in packages of 10, at an initial price of $5 a pill. Dr. Warped plans to increase the price of each pill by 25 cents a month. The Overhead for the operation will consist of

Manufacturing expenses and Administrative expenses:

Manufacturing Expenses: The Ingredients for each pill cost $1.25 Equipment depreciation = $1000 Per Month Lab Technician = $12,000 Per Month Monthly
Administrative Expenses: Rent = 1800, Utilities = 525, Travel Expense includes: Gas = 200, Insurance = 100, Maintenance = 200
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Solution First of all this is not a good practice in medical proffession to start selling drugs with... View the full answer