question archive Learning activity 1) The management of Thompson Controls must decide between three processes for its model C1 electronic thermostat
Learning activity 1) The management of Thompson Controls must decide between three processes for its model C1 electronic thermostat
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Learning activity 1) The management of Thompson Controls must decide between three processes for its model C1 electronic thermostat. 1 1 The monthly cost of the first process is given by C(x) = 20x + 10,000 dollars, where x is the number 1 of thermostats produced; Their marketing department has recently done a survey showing that they can set a price of $58 per thermostat and expect the demand of 2800. Another possibility is for them to consider a lower quality product with a monthly cost of C(x) = 15x + 15,000 and the demand of 3100 units. In case of the second process, the selling price should not be more than 75% of $58. 1 1 1 1) What is your recommendation as their business analysis advisor? 2) How much is their monthly revenue? (based on your answer in part 1)
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1)
Option 1:
Revenue = 58 * 2800 = $162400
Cost = 20*2800 + 10000 = $66000
Profit = 162400-66000 = $96400
Option 2:
Revenue = 75/100*58 * 3100 = $134850
Cost = 15*3100 + 15000 = $61500
Profit = 134850-61500= $73350
Option 1 is recommended basedon HIGHER PROFIT
2) Based on 1) above, Monthly Revenue = $162400
