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Production Decisions at Harding Silicon Enterprises, Inc.;Harding Silicon Enterprises, Inc. produces less than 1% of the world?s supply of 32 MB random access;memory (RAM) chips for electronic devices. HSE?s RAM chips perform according to globally accepted;performance standards for this type of silicon chip (i.e., its chips are just like every other producers?;chips). HSE has hired you to do undertake three tasks;1. Perform a statistical analysis of its short-run production costs to estimate its total variable cost;function, average variable cost function, and marginal cost function. HSE believes its total fixed;costs will be $6,500 per month, so you do not need to estimate TFC.;2. Recommend production levels and forecast profits for two chip price scenarios;a. The price of 32 MB RAM chips reaches $62 per chip, and;b. The price of 32 MB RAM chips falls to $35 per chip.;3. Determine the price below which HSE should shut down operations in the short run.;HSE provides you with the following cost and output data for the past 19 months. Over this time period;inflation has been so low that you do not need to adjust the cost data for the effects of inflation (the CPI;rose only 0.4% over the 19 month time period). Monthly output of chips is given in the second column;which is titled ?Monthly production of finished product.? Costs are reported in seven categories (some;are fixed costs and some are variable costs). HINT: Remember, cost items are part of fixed costs if the;costs do not vary with output, even though fixed cost items may vary over time.;Month;Monthly;production of;finished product;Business;licenses;fees;Insurance;premiums;Building;lease;payment;Materials;expenses Telephone;Energy;expenses;Wage;expense;Nov-98 875 0 0 3570 9690 945 7230 12250;Dec-98 670 0 0 3570 6700 945 5115 8995;Jan-99 1675 6000 2200 3570 16295 945 12884 23106;Feb-99 1155 0 0 3570 11285 945 9240 15225;Mar-99 1845 0 0 3570 16550 945 14220 24530;Apr-99 1650 0 0 3570 16230 945 12700 21600;May-99 1955 0 0 3570 19626 945 15640 27484;Jun-99 2845 0 0 3570 27410 945 22760 39830;Jul-99 2265 0 2200 3570 20526 945 17244 31225;Aug-99 3470 0 0 3570 34176 830 25760 48564;Sep-99 3665 0 0 3570 36726 830 28720 50094;Oct-99 3750 0 0 3570 42576 830 32000 54474;Nov-99 4595 0 0 3570 48226 830 37260 66414;Dec-99 4060 0 0 3570 41095 830 33155 57840;Jan-00 3575 7200 2450 4200 34550 830 27400 50050;Feb-00 4380 0 0 4200 41800 830 34460 61320;Mar-00 5575 0 0 4200 81750 830 54600 82150;Apr-00 7870 0 0 4200 92360 830 102960 130180;May-00 6750 0 0 4200 89576 830 70000 109774;Cost Items for Harding Silicon Enterprises, Inc.;1. a. Compute total variable cost (TVC) by adding the appropriate columns of cost items.;Compute average variable cost (AVC). [Remember that you are given an estimate of;HSE?s future total fixed costs ($6,500 per month).] Print out the 19 months of data on;output (Q) and total variable cost (TVC) and average variable cost (AVC).;b. Plot a scatter diagram of TVC on the vertical axis and Q on the horizontal axis. Does the;scatter diagram suggest a functional form for TVC? Explain briefly.;c. Plot a scatter diagram of AVC on the vertical axis and Q on the horizontal axis. Does the;scatter diagram suggest a functional form for AVC? Explain briefly.;d. Estimate a quadratic AVC function. Present the estimated equation and evaluate the;regression results (i.e., discuss the algebraic signs of the parameter estimates, the;significance levels, and the R2).;e. Evaluate the results of your regression equation in part a. Specifically discuss algebraic;signs of parameters, statistical significance, and goodness of fit.;2. a. How many chips should be produced (monthly) if world chip prices are $62 per chip?;Forecast the HSE?s profit at this output level.;b. How many chips should be produced (monthly) if world chip prices are $35 per chip?;Forecast the profit at this output level.;3. At what price should Harding shut down and produce no chips in the short run?;- Sent to Economics Expert Tutor on 4/26/2010 at 10:07pm;You asked;When working the problem can you write each answer out step by step please.;Thanks;Leona R. Lynn

 

Paper#21322 | Written in 18-Jul-2015

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