Complete the individual problems and submit your solutions using Turnitin. It is not necessary to restate the exercise/prompt but to provide a thorough write-up of your response/solution. Submit answers only in a Word document or PDF. Use APA format for all external references.
Chapter 4: Extent (How Much) Decisions
4-5 Processing Insurance Claims
Your insurance firm processes claims through its newer, larger, high-tech facility and its older, smaller, low-tech facility. Each month, the high-tech facility handles 10,000 claims, and incurs $100,000 in fixed costs and $100,000 in variable costs. Each month, the low-tech facility handles 2,000 claims, and incurs $16,000 in fixed costs and $24,000 in variable costs. If you anticipate a decrease in the number of claims, where will you lay off workers?
4-6 Copier Company
A copy company wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two copiers and output increased by 100,000 pages per day. One month ago, they added five workers and productivity also increased by 50,000 pages per day. Copiers cost about twice as much as workers. Would you recommend they hire another employee or buy another copier?
Chapter 5: Investment Decisions: Look Ahead and Reason Back
5-1 George’s T-Shirt Shop
George’s T-Shirt Shop produces 5,000 custom-printed T-shirts per month. George’s fixed costs are $15,000 per month. The marginal cost per T-shirt is a constant $4. What is his break-even price? What would be George’s break-even price if he were to sell 50 percent more shirts?
5-5 Toy Trucks
Last year, a toy manufacturer introduced a new toy truck that was a huge success. The company invested $2.5 million for a plastic injection molding machine (which can be sold for $2 million) and $100,000 in plastic injection molds specifically for the toy (which are not valuable to anyone else). Labor and the cost of materials necessary to make each truck is about $3. This year, a competitor has developed a similar toy that has significantly reduced demand for the toy truck. Now, the original manufacturer is deciding whether they should continue the production of the toy truck. If the estimated demand is 100,000 trucks, what is the break-even price for the toy truck? Should they shut down?
Parameters: Submit a Word document or PDF and use APA format. No handwritten submissions.
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