A company produces 100 items of Product X and 1500 items of Product Y. Someone suggested to the management to try and focus on producing only one product instead of two. The Management is not sure which product would be more viable for them to produce as they currently adopt a Traditional Costing system, hence both products have the same cost price. You were asked to suggest an alternative way of computing costs, thus being able to direct the Management Team as to which product it would be more viable to produce and thus maximize profits. Discuss further. You may include a practical example to substantiate your argument.

8. The price p (in dollars) and the demand x for a particular wool sweater are related by the equation p = 100 − 0.025x a. Find the domain of this function. Show all work and clearly label the answer below. b. Find the revenue R (x) = x · p , from the sale of x wool sweaters and state the domain of the function R (x) . c. Find the marginal revenue at a production level of 1,600 sweaters and interpret the results. Show all work and clearly label the answer below. d. Find the marginal revenue at a production level of 2,500 sweaters and interpret the results. Show all work and clearly label the answer below.

You manage a donut shop that sells two goods – donuts and coffee. You also face two types of customers – customer type A and customer type B, and you see 100 customers of each type. Their respective values for the 2 goods you sell are:

If you sell donuts and coffee separately, what prices should you charge for each?

Donuts: $______________

Coffee: $______________

If you sell the 2 goods together as a bundle, what price should you charge for the bundle?

Bundle: $_______________


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A manufacture has been selling 1800 television sets a week at $390 each. A market survey indicates that for each $10 rebate offered to a buyer, the number of sets sold will increase by 100 per week.

a) Find the function representing the demand p(x), where x is the number of the television sets sold per week and p(x) is the corresponding price. p(x) =

b) How large rebate should the company offer to a buyer, in order to maximize its revenue? dollars

c) If the weekly cost function is 117000 + 130x, how should it set the size of the rebate to maximize its profit? dollars

a) What’s the difference between a stock dividend and a stock split?

    b)     How do stock dividends and splits affect stock prices?

    c)     In what situation should a firm pay a stock dividend?

    d)     In what situation should a firm split its stock?

    e)    Consider the following case: You have 100 common shares of Comm Suppliers Inc. (CSI) The EPS is $4.00, the DPS is $2.00; and the stock sells for $60 per share. If CSI does a two-for-one stock split how many shares will you have; what will be the new EPS and DPS; and what would you expect the stock price to be?

Needing Part B Assume that you have a LONG position in 25 call options with the following characteristics: Underlying stock Lionsgate (100 shares) Exercise price (X) 5.00 ($ per share) Expiration date June, 2018. At the time you purchased the call options, you paid a premium of Ct = $1.00 ($ per share). A. Given the opening trade described above, what are the three possible closing trades for your call option position? B. Assume that you have decided that your closing trade will be to offset the options. Describe what action you must take to offset the options. Be thorough.

In order to take out a loan, you are required to put up some type of collateral. You decide to offer 1,000 shares of your ZG Corp. stock which is valued at $100 per share. You are concerned that the stock price will increase to $125 before you repay the loan and the lender will sell your shares of stock for a profit. How could you manage this risk using a financial derivative?

(Would you purchase a put or call option? If you they profit off of the shares wouldn't the loan repayment be forgiven because the share of stock exceeds the loan amount of $1M)

Also this is for Risk Management.