PS3_2009 - UNIVERSITY OF CALIFORNIA HAAS SCHOOL OF BUSINESS...

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UNIVERSITY OF CALIFORNIA HAAS SCHOOL OF BUSINESS EWMBA 201A—Economic Analysis for Business Decisions Fall 2009 Felix Várdy Problem Set #3 Doing these problems is optional. The solutions to these questions will be posted by Friday, September 18 and discussed in section Saturday, September 19. As always, the educational value of these exercises will be maximized if you attempt to answer these questions before you look at the answers. Question 1 After a bitter takeover battle, in which the previous management of SC Enterprises was ousted because of their annoying habit of giving away a large fraction of the firm's output on December 25 th instead of selling it, Biff Banyon has been installed as CEO. SC Enterprises—a large toy manufacturing concern—currently operates out of a single building, built in 1978 for $300 million in cash. Given its out-of-the- way location, it is believed that no one would buy it were the building put up for sale. SC Enterprises makes four toy lines: puzzles, teddy bears, dolls, and toy guns. Each toy line has its own assembly line and elves who work on that assembly line. The lines, however, all go through the same packaging and shipping department. Each type of toy takes the same time and same amount of materials to be processed through packaging and shipping (e.g., a puzzle and a teddy bear both take the same time to be processed and use the same amount of packaging materials). The previous management's accounting for these toy lines is
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This note was uploaded on 09/15/2009 for the course EWMBA 201A taught by Professor Wolfram during the Fall '07 term at University of California, Berkeley.

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PS3_2009 - UNIVERSITY OF CALIFORNIA HAAS SCHOOL OF BUSINESS...

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