- 4 Marks
MA – Nov 2024 – L2 – Q5b – Profit Maximization and Batch Selection
Determination of the optimal number of printer batches to import and sell to maximize profit.
Question
Awuah deals in online business, importing and selling printers. The cost of each set of printers varies depending on the number purchased, although printers can only be purchased in batches of 1,000 units. Awuah also has to pay import taxes which vary according to the quantity purchased. Awuah has already carried out some market research and identified that sales quantities are expected to vary depending on the price charged.
The following data has been established for the first month:
| Number of Batches Imported and Sold | Average Cost per Unit (Including Import Taxes) (GH¢) | Total Fixed Costs per Month (GH¢) | Expected Selling Price per Unit (GH¢) |
|---|---|---|---|
| 1 | 10.00 | 10,000 | 20 |
| 2 | 8.80 | 10,000 | 18 |
| 3 | 7.80 | 12,000 | 16 |
| 4 | 6.40 | 12,000 | 13 |
Required:
Determine the number of batches of printers Awuah should import and sell to maximize profit.
Find Related Questions by Tags, levels, etc.
- Tags: Batch Selection, CVP Analysis, Fixed and Variable Costs, Profit Maximization
- Level: Level 2
- Topic: Cost-Volume-Profit (CVP) Analysis
- Series: Nov 2024
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