Question
1. Molega Lake Outfitters Manufactures stand up paddle boards. These are sold through smaller retailers across Canada. They are considering making a smaller children's paddle
1. Molega Lake Outfitters Manufactures stand up paddle boards. These are sold through smaller retailers across Canada. They are considering making a smaller children's paddle board. It will sell to retailers for $325 each. Equipment to manufacture the product is estimated to cost $63,000 and labour and materials to make the board is estimated to be $235 per board.
a) [4 pts] Construct revenue, cost and profit functions in terms of the number of boards made.
b) [3 pts) How many boards must be made and sold to breakeven?
c) (3 pts) What is the monetary value at the breakeven point.
d) [3 pts] Canadian Tire would like to be exclusive retailer for the boards and is prepared to purchase 1,000 boards. What is the lowest price at which Molega can sell the boards to Canadian Tire and still breakeven?
e) [6 pts] Construct a graph of the revenue, cost and profit functions from part. Label all functions and the axes, as well as the breakeven point.
f) (3 pts) Suppose that they estimate that demand will be 175 units per year. How long will it take for them to breakeven?
g) [3 pts) How many units must they sell to achieve a profit of 20% of total costs?
h) [3 pts) How many units must they sell to achieve a profit of at least 20% of revenues?
i) (3 pts] A national chain of surf supply stores wants to be the exclusive distributor of the Molega Lake Outfitters and has guaranteed to purchase 400 units over the next two years. What is the price that Molega Lake Outfitters can sell the boards for and still breakeven in 2 years?
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