Golden Chicken

To solve the different scenarios for the flourishing Chicken Company we mustiness understand first what is the underway hit and operations of the company, and to fulfill this we evaluate the structure of the new profits that is as follows:

win=Revenue-Cost

Revenues:

The current flow of revenues derives from the sell of eggs to the wholesalers

Existing charter is Q=1000 units/day, and the current price is $6/case

From this we obtain the next revenue:

Revenue(R)=Price(P) * Quantity(Q)

R=$6*1,000= $6,000.00

Costs:

The be that Golden chicken company has are related to transportation and unsanded stuff and nonsenses.

Raw materials: the cost per case up to 1,000 is $3.00 and as this point, want is fixed, we will not incur in additional costs to bring eggs from outside suppliers.

RMc= 1000 * $3.00 = $3,000.00

revelation: An apprehension with a transportation company allows us to distribute our products, we understructure transport up to 50 cases per truck at a cost of $50.00 per route.

To transport the 1,000 eggs that we have as current engage we will require

1,000 units/ 50 units/truck = 20 trucks

Trc= 20 * $50.00 = $1,000.00

We obtain the total cost by adding the Raw material and transportation cost and we obtain:
TC= $3,000.00 + $1,000.00 = $4,000.



00

Profit:

The initial profit is:

P=R-C = $6,000.00 - $4,000.00 = $2,000.00

Case A

The wholesale price of a case of eggs increase to $6.60

To evaluate this scenario we have the current profit to evaluate the new break even point, and the profit to compare is:

P1= $2,000.00

For this scenario we stand a decrease in the demand as the price increases by 10%, therefore we would expect no need to buy additional eggs.

Therefore we bet the new quantity to be sold to obtain P1

P1= (Price*Quantity) - Transport cost new raw material cost new

$2,000 .00 = $6.6 * Qn (Qn/50)*$50 Qn*$3.00

$2,000.00 = $6.6Qn Qn - $3 Qn

$2,000.00 = $2.6 Qn

Qn = 770.00...If you want to get a full essay, coif it on our website: Ordercustompaper.com



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