Your employer is considering launching two new products to market: alpha and delta.

A professor at Local University has determined that these products have the following cost and demand factors:

	Alpha	Delta
Total Marginal Cost per Unit	$500	$680
Price (Zero-Demand)	$1,500	$1,000
Price which Causes a Change in Demand	$50	$75
Change in Demand for a Given Change in Price	750	900
Total Variable Cost per Unit	$400	$550
Required Skilled Labour per Unit Produced	.25 DLH per unit	1.20 DLH per unit
Required Semi-Skilled Labour per Unit Produced	.60 DLH per unit	1.00 DLH per unit

Required

1 If your employer has 1,800 hours of available skilled labour, and 2,500 hours of available semi-skilled labour, can it achieve its stated goal of 50% market share for each product over the next year?

(a ) If the firm cannot hit 50%, what amount of market share could your employer potentially achieve?

2 Given your analysis, what would be the firm’s dollar contribution margin? Will this cover total fixed costs of $900,000?

Answer rating: 100% (QA)

1 a In order to achieve a 50 market share for each product the firm would need to produce 1800 units ... View the full answer