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"1. To help the marketing manager prepare for her...

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"1. To help the marketing manager prepare for her presentation, she has asked you to fi ll in the blanks in the following table. The selling prices in the table were computed by successively decreasing the selling price by 5%. The estimated unit sales were computed by successively increasing the unit sales by 8%. For example, $23.75 is 5% less than $25.00 and 54,000 units is 8% more than 50,000 units. Selling Price Estimated Unit Sales Sales Variable Cost Fixed Expenses Net Operating Income $25.00 50,000 $1,250,000 $300,000 $960,000 $(10,000) $23.75 54,000 $1,282,500 $324,000 $960,000 $ (1,500) $22.56 58,320 ? ? ? ? $21.43 62,986 ? ? ? ? $20.36 68,025 ? ? ? ? $19.34 73,467 ? ? ? ? $18.37 79,344 ? ? ? ? $17.45 85,692 ? ? ? ? $16.58 92,547 ? ? ? ? $15.75 99,951 ? ? ? ? 2. Using the data from the table, construct a chart that shows the net operating income as a function of the selling price. Put the selling price on the X-axis and the net operating income on the Y-axis. Using the chart, determine the approximate selling price at which net operating income is maximized. 3. Compute the price elasticity of demand for the SpamBlocker software. Based on this calculation, what is the profi t-maximizing price? 4. The owners have invested $2,000,000 in the company and feel that they should be earning at least 2% per month on these funds. If the absorption costing approach to pricing were used, what would be the target selling price based on the current sales of 50,000 units? What do you think would happen to the net operating income of the company if this price were charged? 5. If the owners of the company are dissatisfi ed with the net operating income and return on investment at the selling price you computed in (3) above, should they increase the selling price? Explain.,Here is the assignment in a Word Document.

 

Paper#3662 | Written in 18-Jul-2015

Price : $25
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