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Sagot :
The EMV (Expected Monetary Value) of using the present system with a variable cost of $55 per unit and a fixed cost of $15,500 is $239,515.
Data and Calculations:
Present New System 1 New System 2
Variable cost per unit $55 $48 $25
Fixed cost $15,500 $27,200 $45,000
Production units:
Without competition 4,500 6,800 8,800
With competition 3,750 5,500 6,700
Probability of competition 57% 57% 57%
Probability: no competition 43% 43% 43% (100 -57)
Expected production units:
Present System = 4,073 units (3,750 x 57%) + (4,500 x 43%)
Expected monetary value of present system:
Variable cost = $224,015 (4,073 x $55)
Fixed costs = $15,500
Total EMV = $239,515
- Cost per unit = $58.81 ($239,515/4,073)
Expected production units:
New System 1 = 6,059 units (5,500 x 57%) + (6,800 x 43%)
Expected monetary value of present system:
Variable cost = $290,832 (6,059 x $48)
Fixed costs = $27,200
Total EMV = $318,032
- Cost per unit = $52.49 ($318,032/6,059)
Expected production units:
New System 2 = 7,603 units (6,700 x 57%) + (8,800 x 43%)
Expected monetary value of present system:
Variable cost = $190,075 (7,603 x $25)
Fixed costs = $45,000
Total EMV = $235,075
- Cost per unit = $30.92 ($235,075/7,603)
Thus, the EMV for using the present system is $239,515.
Read more about EMV at https://brainly.com/question/17056362
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