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    Chapter 23 - Sir. Kairus

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    Nami Tsuruoka
    This document provides information on project background and economic aspects from a management consultancy solutions manual. It contains two main steps: 1. It derives the demand unit function Q(p) = -1000p + 10,000 by fitting a straight line to price-quantity points from a table and reading the function from the graph. 2. It determines the total cost function C(q) = 2q + 5000 by considering fixed costs of P5000 and variable costs of P2.00 per unit, using the linear trend method formula. The document explains that the revenue and profit functions can be derived from the demand and cost functions Q and C.

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    Chapter 23 - Sir. Kairus

    Uploaded by

    Nami Tsuruoka
    193 views2 pages
    This document provides information on project background and economic aspects from a management consultancy solutions manual. It contains two main steps: 1. It derives the demand unit function Q(p) = -1000p + 10,000 by fitting a straight line to price-quantity points from a table and reading the function from the graph. 2. It determines the total cost function C(q) = 2q + 5000 by considering fixed costs of P5000 and variable costs of P2.00 per unit, using the linear trend method formula. The document explains that the revenue and profit functions can be derived from the demand and cost functions Q and C.

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    This document provides information on project background and economic aspects from a management consultancy solutions manual. It contains two main steps: 1. It derives the demand unit function Q(p) = -1000p + 10,000 by fitting a straight line to price-quantity points from a table and reading the function from the graph. 2. It determines the total cost function C(q) = 2q + 5000 by considering fixed costs of P5000 and variable costs of P2.00 per unit, using the linear trend method formula. The document explains that the revenue and profit functions can be derived from the demand and cost functions Q and C.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    193 views2 pages

    Chapter 23 - Sir. Kairus

    Uploaded by

    Nami Tsuruoka
    This document provides information on project background and economic aspects from a management consultancy solutions manual. It contains two main steps: 1. It derives the demand unit function Q(p) = -1000p + 10,000 by fitting a straight line to price-quantity points from a table and reading the function from the graph. 2. It determines the total cost function C(q) = 2q + 5000 by considering fixed costs of P5000 and variable costs of P2.00 per unit, using the linear trend method formula. The document explains that the revenue and profit functions can be derived from the demand and cost functions Q and C.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    MANAGEMENT CONSULTANCY - Solutions Manual

    CHAPTER 23 PFS: PROJECT BACKGROUND AND ECONOMIC ASPECT


    I. Questions 1. Refer to page 459 2. Refer to page 461 3. Refer to pages 465 to 471 4. Refer to pages 472 to 473 5. Refer to page 472 6. Refer to page 476 7. Refer to page 477 II. Case Problem Step 1: Find the demand unit function. The data given in table form are plotted on a cc-place, and a freehand straight line is fitted to the points, as shown on page 17-2. From the chart we may read points (5.50, 4500) and (10, 0). Let p represent the price and q units of the mechanical toy. Substituting in formula (2) of Arithmetic (Linear) trend method, we have = 0 - 4500 q - 4500 p - 5.50 10 - 5.50 4.50(q - 4500) = -4500(p- 5.50), and q = Q(p) = -1000p + 10,000. Note that Q is the unit demand function where price is the independent and quantity the dependent variable. 23-1

    Chapter 23

    PFS: Project Background and Economic Aspect

    Q (p) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 Q(p) = -1,000p + 10,000 2,000 1,000 0 1 2 3 4 5 6 7 8 9
    (10, 0) (5.50, 4,500)

    10

    (PRICE - PESOS) Step 2: Find the total cost function.

    Let C be such a function. Since fixed costs are expected to be P5000 and variable P2.00 per toy, the cost function by formula (1) of Arithmetic (Linear) trend method is C(q) = 2q + 5000. On the basis of functions Q and C we can derive the sales revenue and profit functions.

    23-2

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