Zaccagnino Corporation makes a range of products. The company's predetermined overhead rate is $14 per direct labor-hour, which was calculated using the following budgeted data:
Variable manufacturing overhead........$105,000
Fixed manufacturing overhead............$385,000
Direct labor-hours................................ 35,000

Management is considering a special order for 300 units of product D03C at $119 each. The normal selling price of product D03C is $157 and the unit product cost is determined as follows:
Direct material......................$64.00
Direct labor............................37.50
Manufact overhead applied....35.00
--------
Unit product cost................ $136.50

If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order.
Required: If the special order were accepted, what would be the impact on the company's overall profit?

Solution Preview

Zaccagnino Corporation makes a range of products. The company's predetermined overhead rate is $14 per direct labor-hour, which was calculated using the following budgeted data:
Variable manufacturing overhead........$105,000
Fixed manufacturing overhead............$385,000
Direct labor-hours................................ 35,000

Management is considering a special order for 300 units of product D03C at $119 each. The normal selling price of product D03C is $157 and the unit product cost is determined as follows:
Direct material......................$64.00
Direct labor............................37.50
Manufact overhead applied....35.00
--------
Unit product cost................ $136.50

A. Calculate the gross profit ratio for each of the past three years.
b. Assume that Intel's net revenues for the first four months of 2009 totaled $12.6 billion. Using the 2008 gross profit ratio from above, calculate an estimated cost of goods sold and gross profit for the four months.
See attachment for data and detail

(i) A competitive firmâ??s total cost function is given by
TC = .25Q2 + 25
(with MC = .5Q).
The firm faces a market price of $15. Algebraically calculate the profit maximizing output and the level of optimal profit for the firm.
(ii) Suppose that fixed costs increase by $50 but the prevailing market price rema

The second largest public utility in the nation is the sole provider of electricity in 32 counties of southern Florida. To meet monthly demand for electricity in these counties, which is represented by the inverse demand function, P = 1000 - 5 Q, the utility company has set up two electric generating facilities: Q â? kilowat

A monopolist's demand function is given by
P = 80-3Q
(with MR = 80-6Q).
Its total cost function is
TC = 20Q + 200
(with MC = 20).
(i) Using algebra determine the profit maximizing output, price and optimal profit for the firm.
(ii) Suppose that instead of maximizing profit, the firm wants to maximize total revenue

The market demand function of a firm is given by 8P + Q - 64 = 0, and the firm's average cost function takes the form AC = 8/Q + 6 - 0.4Q + 0.08Q2.
i)Determine the price and quantity for maximum sales revenue and calculate the maximum revenue.
ii)Determine the price and quantity for minimum marginal costs and calculate the min

P = 300 - .001 Q
TC = 9,000,000 + 20 Q + .0004 Q²
a) Find TR, MR and AR.
b) Find the AVC, ATC and MC.
c) Calculate the profit maximization level of activity.
d) Calculate total revenue, total cot and profit or loss at profit maximization level of activity.
e) Calculate elasticity of demand at profit maximization.
f) Ca

Jill resigns from her job, at which she was earning $50,000 per year, and uses her $100,000 savings, on which she was earning 5 percent interest, to start a business. In the first year, she earns revenue of $150,000, and her costs are as follows.
Rent $25,000
Utilities $12,000
Wages $30,000
Materials $20,000
A. Calcul

1. Fast Buck Inc. sells a product at a unit price of $5.50, with a variable cost of $3.25 per unit. Total fixed costs are $360,000.
a. Calculate the breakeven point.
b. Calculate a 20% increase in volume above breakeven and determine its precise dollar impact on profits.
c. Calculate the effect of a $.50 drop in

Q2. A firm's profit function is given by:
Profit = 108 + 2X^2 -4 XY + 3Y^2 - 8X - 12Y
Determine:
(a) the values of X and Y that maximize profit.
(b) the maximum value of profit.
I've taken the 1st derivate for X & Y, solves for x and equated these two against each other and and get X = 10. Plug this X value in and I get Y