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Unformatted text preview: 1. You are the advisor of Victory Car, a company that provides partially assembled automobile components to Vanguard, a major automobile manufacturer. They have just received a rush order from Vanguard, offering to pay $160 per unit for the first 500 units, and $120 per unit thereafter. In your initial interviews of the management and the workers of Victory Car, you have collected the following information: - The cost structure of our plant involves fixed costs of $30,000 per month, plus variable costs for assembly; - Victory Car’s variable costs are the following: a. What would be your recommendations to the company? Remember to explain how many units Victory Car should produce (assuming that you can only produce a multiple of 100 and that the rush order is Victory Car’s only production) and at what profits/loss. Do make a table outlining the costs of the firm. Units Variable Cost Total Cost Total Revenue Total Profit Average Profit Marginal Profit 100 5000 35000 16000-19000-19000...
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- Spring '11