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Pricing plays a vital role in determining the profitability of a company. As management accountant of AXY Ltd you have enlisted the services of a
Pricing plays a vital role in determining the profitability of a company. As management accountant of AXY Ltd you have enlisted the services of a statistical firm to provide your company with information on costs and prices for the month of December 2019. You have been provided with the following demand and costs functions for the month of December 2019: P=180-6Q, where P is the unit selling price and Q is quantity of units in thousands. TC= 4Q + 8Q + 400, where TC is total costs in thousands of dollars. Required: (a) Calculate the production amount that will maximize profits. (8 marks) (b) Find the optimal price that maximizes profit. (3 marks) (c) What is the optimal sales revenue? (3 marks) (d) What is the maximum profit? (8 marks) (e) Name three (3) things that a company has to consider when setting selling prices
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