-7-9: Molton Waste Removal (B) divisions. in fact correct and outlining the vari- allsite allocates the Marketing Division's expenses to the other Continuing the problem started in Molton Waste Removal (A) in Chapter 2. Molton Waste Removal hires Sue Lingle to manage the apartment complex collection service and enters the apartment refused removal market. To provide Lingle incentives to maximize Molton's profit , she will receive a bonus tied to the profits of her apartment waste collection business. Apartment profits are calculated based on the apartment waste collection revenues less the costs of the apartment waste service (truck lease, dumpsters. driver, fuel, oil, licensing, landfill charges, and Lingle's salary and benefits). (Note: Any bonus paid to Lingle is not included in calculating the profits of the apartment waste service.) In addition to these direct costs of the apartment refuse collection service, Lingle is charged a fee of $50 per 25-unit apartment com- plex to cover her share of the billing, accounting, legal costs, and general operating expenses of Molton. Required: a. Assume all the costs in Molton Waste Removal (A) in Chapter 2 remain the same and in addi- tion to the $54,000 per month cost of the truck, driver, etc. Lingle's salary and benefits are $72,000 per year. What price-quantity combination will Lingle select to maximize her bonus? b. Explain why the price-quantity combination Sue Lingle chooses in part (a) is the same or differs from the firm-profit maximizing price quantity combination chosen in part (b) of Molton Waste Removal (A) in Chapter 2. c. In computing Sue Lingle's apartment waste collection profits for determining her bonus, should she be charged a fee of $50 per 25-unit apartment complex to cover her share of th billing, accounting, legal costs, and general operating expenses of Molton? -9: Molton Waste Removal (B) the Marketing Division's expenses to the other ng the vari Continuing the problem started in Molton Waste Removal (A) in Chapter 2. Molton Waste Removal hires Sue Lingle to manage the apartment complex collection service and enters the apartment refused removal market. To provide Lingle incentives to maximize Molton's profit , she will receive a bonus tied to the profits of her apartment waste collection business. Apartment profits are calculated based on the apartment waste collection revenues less the costs of the apartment waste service truck lease, dumpsters driver, fuel, oil, licensing, landfill charges, and Lingle's salary and benefits) (Note: Any bonus paid to Lingle is not included in calculating the profits of the apartment waste service.) In addition to these direct costs of the apartment refuse collection service, Lingle is charged a fee of $50 per 25-unit apartment com- plex to cover her share of the billing, accounting, legal costs, and general operating expenses of Molton. sta Required: a. Assume all the costs in Molton Waste Removal (A) in Chapter 2 remain the same and in addi- print innobis tion to the $54,000 per month cost of the truck, driver, etc., Lingle's salary and benefits are $72,000 per year. What price-quantity combination will Lingle select to maximize her bonus? b. Explain why the price-quantity combination Sue Lingle chooses in part (a) is the same or differs from the firm-profit maximizing price-quantity combination chosen in part (b) of Molton Waste Removal (A) in Chapter 2. c. In computing Sue Lingle's apartment waste collection profits for determining her bonus, should she be charged a fee of $50 per 25-unit apartment complex to cover her share of the billing, accounting, legal costs, and general operating expenses of Molton? N P2-33: Molton Waste Removal (A) Molton Waste Removal now only collects garbage from private residences (houses) because it does not own trucks with the capability of lifting and emptying garbage dumpsters used by apartment completes. Molton currently is reassessing this decision. To lease, license, insure, and get the vari- cus permits to operate a refuse collection truck with a fork-lift capable of emptying a dumpster costs $54,000 per month. This includes the cost of the driver, fuel, and oil. Molton prices each apartment complex based on the number of apartment units in the complex based on a standard of 25 units. The Nature of Costs The following table indicates how Mohon expects the number of parent customers to vary with the price (per 25 apartment units) Number of Customers Price per Month 73 100 105 110 115 120 125 130 135 140 145 1.560 1.538 1.516 1.494 1.472 1.450 1.428 1,406 1,384 1.362 (Table is based on the demand curve: P = 2000 - 4.40.) In other words, if Molton wants 100 apartment customers, it will set the price at $1.560 per 25 units per month. If an apartment has 50 units, then at this price point, this apartment complex pays $3,120 (2 x $1,560) per month. Since garbage is collected once per week at each apartment complex, the single truck has the capacity to handle up to 145 25-unit apartment complexes per month Molton uses a landfill in the county to dispose of the waste. The landfill charges $1.750 per truck load of garbage the size Molton would acquire. Molton estimates that 10 apartment complexes (each with 25 units) will fill the truck once and will require dumping at the landfill. And, Molton will remove the refuse at each 25-unit complex exactly four times per month. Each 25-unit apartment complex requires Molton to lease a dumpster that can be lifted and emptied by its fork-lift-equipped garbage truck. Molton can lease these dumpsters for $200 per month per 25-unit dumpster Required: a. What is Molton's monthly fixed cost of adding an apartment-complex refuse disposal service to its existing resident services? And what is Molton's monthly variable cost of servicing each 25-unit apartment complex? b. Given the demand curve Molton expects to face in the apartment rehase molective business, what price should it choose to maximize profits, and how much poli volit nuke at ttis price? c. Based on the profit maximizing price computed in part (b), what is de beber point at this price? d. After preparing the analysis in part (b). Molton discovers it has forgotten toincide an additional cost of $72,000 per year to cover the cost of the new person needed to contact potential apartment complexes, sign contracts for waste removal, and manage the apartment refuse collection business. After incorporating the $72,000 cost of the manager to market and manage the apartment collection business, how do your answers to parts (b) and (c) change? In other words, what price should Molton set to maximize profits, how much profit will Molton make at this price, and what is the break-even point at this new price? your e Discuss why your answers in parts (a) and (c) are either the same or differ from answers in part (d). -7-9: Molton Waste Removal (B) divisions. in fact correct and outlining the vari- allsite allocates the Marketing Division's expenses to the other Continuing the problem started in Molton Waste Removal (A) in Chapter 2. Molton Waste Removal hires Sue Lingle to manage the apartment complex collection service and enters the apartment refused removal market. To provide Lingle incentives to maximize Molton's profit , she will receive a bonus tied to the profits of her apartment waste collection business. Apartment profits are calculated based on the apartment waste collection revenues less the costs of the apartment waste service (truck lease, dumpsters. driver, fuel, oil, licensing, landfill charges, and Lingle's salary and benefits). (Note: Any bonus paid to Lingle is not included in calculating the profits of the apartment waste service.) In addition to these direct costs of the apartment refuse collection service, Lingle is charged a fee of $50 per 25-unit apartment com- plex to cover her share of the billing, accounting, legal costs, and general operating expenses of Molton. Required: a. Assume all the costs in Molton Waste Removal (A) in Chapter 2 remain the same and in addi- tion to the $54,000 per month cost of the truck, driver, etc. Lingle's salary and benefits are $72,000 per year. What price-quantity combination will Lingle select to maximize her bonus? b. Explain why the price-quantity combination Sue Lingle chooses in part (a) is the same or differs from the firm-profit maximizing price quantity combination chosen in part (b) of Molton Waste Removal (A) in Chapter 2. c. In computing Sue Lingle's apartment waste collection profits for determining her bonus, should she be charged a fee of $50 per 25-unit apartment complex to cover her share of th billing, accounting, legal costs, and general operating expenses of Molton? -9: Molton Waste Removal (B) the Marketing Division's expenses to the other ng the vari Continuing the problem started in Molton Waste Removal (A) in Chapter 2. Molton Waste Removal hires Sue Lingle to manage the apartment complex collection service and enters the apartment refused removal market. To provide Lingle incentives to maximize Molton's profit , she will receive a bonus tied to the profits of her apartment waste collection business. Apartment profits are calculated based on the apartment waste collection revenues less the costs of the apartment waste service truck lease, dumpsters driver, fuel, oil, licensing, landfill charges, and Lingle's salary and benefits) (Note: Any bonus paid to Lingle is not included in calculating the profits of the apartment waste service.) In addition to these direct costs of the apartment refuse collection service, Lingle is charged a fee of $50 per 25-unit apartment com- plex to cover her share of the billing, accounting, legal costs, and general operating expenses of Molton. sta Required: a. Assume all the costs in Molton Waste Removal (A) in Chapter 2 remain the same and in addi- print innobis tion to the $54,000 per month cost of the truck, driver, etc., Lingle's salary and benefits are $72,000 per year. What price-quantity combination will Lingle select to maximize her bonus? b. Explain why the price-quantity combination Sue Lingle chooses in part (a) is the same or differs from the firm-profit maximizing price-quantity combination chosen in part (b) of Molton Waste Removal (A) in Chapter 2. c. In computing Sue Lingle's apartment waste collection profits for determining her bonus, should she be charged a fee of $50 per 25-unit apartment complex to cover her share of the billing, accounting, legal costs, and general operating expenses of Molton? N P2-33: Molton Waste Removal (A) Molton Waste Removal now only collects garbage from private residences (houses) because it does not own trucks with the capability of lifting and emptying garbage dumpsters used by apartment completes. Molton currently is reassessing this decision. To lease, license, insure, and get the vari- cus permits to operate a refuse collection truck with a fork-lift capable of emptying a dumpster costs $54,000 per month. This includes the cost of the driver, fuel, and oil. Molton prices each apartment complex based on the number of apartment units in the complex based on a standard of 25 units. The Nature of Costs The following table indicates how Mohon expects the number of parent customers to vary with the price (per 25 apartment units) Number of Customers Price per Month 73 100 105 110 115 120 125 130 135 140 145 1.560 1.538 1.516 1.494 1.472 1.450 1.428 1,406 1,384 1.362 (Table is based on the demand curve: P = 2000 - 4.40.) In other words, if Molton wants 100 apartment customers, it will set the price at $1.560 per 25 units per month. If an apartment has 50 units, then at this price point, this apartment complex pays $3,120 (2 x $1,560) per month. Since garbage is collected once per week at each apartment complex, the single truck has the capacity to handle up to 145 25-unit apartment complexes per month Molton uses a landfill in the county to dispose of the waste. The landfill charges $1.750 per truck load of garbage the size Molton would acquire. Molton estimates that 10 apartment complexes (each with 25 units) will fill the truck once and will require dumping at the landfill. And, Molton will remove the refuse at each 25-unit complex exactly four times per month. Each 25-unit apartment complex requires Molton to lease a dumpster that can be lifted and emptied by its fork-lift-equipped garbage truck. Molton can lease these dumpsters for $200 per month per 25-unit dumpster Required: a. What is Molton's monthly fixed cost of adding an apartment-complex refuse disposal service to its existing resident services? And what is Molton's monthly variable cost of servicing each 25-unit apartment complex? b. Given the demand curve Molton expects to face in the apartment rehase molective business, what price should it choose to maximize profits, and how much poli volit nuke at ttis price? c. Based on the profit maximizing price computed in part (b), what is de beber point at this price? d. After preparing the analysis in part (b). Molton discovers it has forgotten toincide an additional cost of $72,000 per year to cover the cost of the new person needed to contact potential apartment complexes, sign contracts for waste removal, and manage the apartment refuse collection business. After incorporating the $72,000 cost of the manager to market and manage the apartment collection business, how do your answers to parts (b) and (c) change? In other words, what price should Molton set to maximize profits, how much profit will Molton make at this price, and what is the break-even point at this new price? your e Discuss why your answers in parts (a) and (c) are either the same or differ from answers in part (d)