1. Indicate if the following items are relevant or irrelevant to your decision
a. The price of the new printer
b. The price you paid for the old printer
c. The trade-in value of the old printer
d. Paper costs
e. The difference between ink cartridges costs
2 Assume that snow delights reputation has diminished and other resorts in the vicinity are only charging $75 per lift ticket snowdelights has become a price-taker and will not be able to charge more than its competitors. At the market price, snowdelight managers believe they will still serve 6,50,000 skiers and snowboarders each season.
Requirements
a. If snowdelight cannot reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level?
b. Assume snow delight has found ways to cut its fixed costs to $28 million. What is its new target variable cost per skiers/snowboarder?
3 Store-it produces plastic storage bins or household storage needs. The company makes two sizes of bins; large (50 gallon) and regular (35 gallon). Demand for the product is so high that store-in can sell as many of each size as it can produce. The company uses that same machinery to produce both sizes the machinery can only be run for 3,400 hours per periods. Store-It can produce 10 large bins every hour, where s it can produce 17 regular bins in the same amount of time. fixed costs amount to $ 1,05,000 per period. Sales price and variable costs are as follows:
Regular Large
Sales price per unit $ 850 $ 10.50
Variable cost per unit $ 3.50 $ 4,30
Assume demand for regular bind is limited to 32,000 units and demand for large bins is limited to 27,000 units.
a. How many of each size bin should store-It make now?
b. Given this product mix, what will the company's operating income be?
c. Explain why the operating income is less than it was when store-It was producing its optimal product mix