Suppose the JLFB movie production company has produced two movies, A and B, and distributes them...

Suppose the JLFB movie production company has produced two movies, A and B, and distributes them to theaters with willingness to pay for the two movies, which is shown below,

Movie A Movie B

A. Smith Theater $135 $95

J. Schumpeter Theater $85 $115

a. Which package will result in the largest profit for the JFLB movie production company?

b. Charge $85 for movie A and $95 for movie B.

c. Charge $135 for movie A and $115 for movie B.

d. Charge $100 for both movie A and B if they are bought together.

e. Charge $110 for both movie A and B if they are bought together.

Expert Solution

Answer : The answer is "Charge $85 for movie A and $95 for movie B".

Because if the price of movie A is $85 then both theaters will purchase movie A. So, at $85 price for movie A the movie production company gets = 2 * 85 = $170. But at $135 price for movie A only one theater is ready to purchase. So, at $135 price level for movie A the movie production company gets = 1 * 135 = $135. As by charging $85 price for movie A the movie production company gets higher profit hence charging $85 for movie A provides the largest profit to the movie production company.

If the price of movie B is $95 then both theaters will purchase the movie B. So, at $95 price for movie B the movie production company gets = 2 * 95 = $190. But at $115 price for movie B only one theater is ready to purchase. So, at $115 price level for movie B the movie production company gets = 1 * 115 = $115. As by charging $95 price for movie B the movie production company gets higher profit hence charging $95 for movie B provides the largest profit to the movie production company.

Total profit at $85 price for movie A and $95 price for movie B = 170 + 190 = $360.

Total profit at $135 price for movie A and $115 price for movie B = 135 + 115 = $250.

Therefore, as $85 price for movie A and $95 price for movie B the total profit is higher hence the option "Charge $85 for movie A and $95 for movie B" is correct.

Rahul Sunny answered 1 year ago

A company has two production plants: A and B. 40% of total production is produced in...

A company has two production plants: A and B. 40% of total production is produced in A and 60% in B. It is further known that 3% of A's production and 5% of B's production are defective. 14 articles produced by the company are chosen at random. What is the probability that: a) Only 3 of the items are defective b) At least 2 are defective? c) Only 3 of the articles are good? d) At most 7 items come...

Movie companies need to predict the gross receipts of individual movies once a movie has debuted....

Movie companies need to predict the gross receipts of individual movies once a movie has debuted. The following results, stored in the table below, are the first week-end gross, the U.S. gross and the worldwide gross (in $ Million) of the eight Harry Potter movies: Title First Weekend Gross ($ Mil) U.S. Gross ($ Mil) Worldwide Gross ($ Mil) Sorcerer’s stone 90.295 317.558 976.458 Chamber of secrets 88.357 261.988 878.988 Prisoner of Azkaban 93.687 249.539 795.539 Goblet of Fire 102.335...

A financier whose specialty is investing in movie productions has observed that, in general, movies with...

A financier whose specialty is investing in movie productions has observed that, in general, movies with "big-name" stars seem to generate more revenue than those movies whose stars are less well known. To examine his belief, he recorded the gross revenue and the payment (in $ millions) given to the two highest-paid performers in each movie for ten recently released movies Movie Cost of Two highest paid performers Gross Revenue 1 5.3 48 2 7.2 65 3...

1. ABC Company has produced a higher level of production in May than it produced in...

1. ABC Company has produced a higher level of production in May than it produced in April, but had the same variable costs per unit and the same total fixed costs. Which of the following is true about May’s reported costs? A. Total variable cost is less in May B. Total cost per unit is less in May C. Total cost per unit is more in May D. Total fixed costs are more in May 2. Depreciation on sewing machines...

Suppose the following data are product weights for the same items produced on two different production...

Suppose the following data are product weights for the same items produced on two different production lines. Line 1 Line 2 13.6 13.4 13.9 14.2 14.0 14.5 13.8 14.0 13.1 14.6 13.5 13.7 13.3 14.1 13.6 14.9 12.8 14.7 14.1 14.3 15.0 14.8 Test for a difference between the product weights for the two lines. Use α = 0.05. State the null and alternative hypotheses. H0: Median for line 1 − Median for line 2 ≥ 0 Ha: Median for...

On a weekend, two parents take their children (A, B and C) to the movies. They...

On a weekend, two parents take their children (A, B and C) to the movies. They sit in a row of five seats. Find the probability that a) A and B sit next to each other. b) Alice and C do not sit next to each other. c) Alice and B sit next to each other while A and C do not sit next to each other.

A company sells two products, A and B. Product A Product B Produced and sold 8.000...

A company sells two products, A and B. Product A Product B Produced and sold 8.000 units 16.000 units Sale price per unit 65 52 Variable cost per unit 35 30 Fixed cost per unit 15 15 Fixed cost is divided in a traditional way, based on the produced quantity. The company started to design a new product C to replace product B. The company could sell 11.000 units of product C with a selling price of 80 per unit....

Suppose there are two types of people going to see two movies: The Dark Knight and...

Suppose there are two types of people going to see two movies: The Dark Knight and Mama Mia, Type A person like Mary is willing to pay $10.00 for Dark Night and $15.00 for Mamma Mia, while Type B person like Jack is willing to pay $18.00 to see The Dark Knight, while $8.00 to see Mamma Mia. Suppose the cost of theatres are zero. If the movie theatres can only sell the tickets individually for each movie, what will...

Company XYZ Sdn Bhd has two production departments; Department A and Department B.

Company XYZ Sdn Bhd has two production departments; Department A and Department B. The company uses the basis direct labor hour to determine predetermine overhead rate. A total of 3 500 units were produced on Job 3113.The following information relates to both departments for the year 2019:Department ADepartment BBudgeted manufacturing overheadRM 500 000RM 250 000Budgeted direct labor hours32 00025 500Budgeted machine hours3 00018 000The company shows the following information relates to Job 3113:Materials requisitioned RM 20 000Direct labor cost RM...

Chibucos Company has two products: A and B. The annual production and sales level of Product...

Chibucos Company has two products: A and B. The annual production and sales level of Product A is 9,094 units. The annual production and sales level of Product B is 15,826. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools

Question