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1)If Apple decides to sell furniture under the 'Apple' brand name, it is engaging in 2 Multiple Choice 1109 brand extension brand moving brand extending brand repositioning 2)Barbie Company manufactures and sells a single product
1)If Apple decides to sell furniture under the 'Apple' brand name, it is engaging in 2 Multiple Choice 1109 brand extension brand moving brand extending brand repositioning
2)Barbie Company manufactures and sells a single product. A partially completed schedule of the company's total and per unit costs over the relevant range of 15,000 to 25,000 units produced and sold annually is: Units produced and sold 15,000 20,000 25,000 Total Costs Variable cost Fixed cost Total Costs 67,500 150,000 217,500 A B ? D Cost per unit Variable cost Fixed cost Total cost per unit E F H
Expert Solution
1)
If apple decides to sell further under the Apple brand name, it is engaging in
Brand Extention
Because it is engaging in using the well developed image of a brand name under a different product category
2)
Answer)
|
Units Produced and Sold |
|||
|
15,000 |
20,000 |
25000 |
|
|
Total Costs |
|||
|
Variable Cost |
67,500 |
90,000 |
112,500 |
|
Fixed Cost |
150,000 |
150,000 |
150,000 |
|
Total Costs |
217,500 |
240,000 |
262,500 |
|
Cost Per unit |
|||
|
Variable cost |
4.50 |
4.50 |
4.50 |
|
Fixed Cost |
10.00 |
7.50 |
6.00 |
|
Total Cost |
14.50 |
12.00 |
10.50 |
Working Notes:
Number of units Produced and Sold: 15,000
Variable cost per unit = Total Variable cost/ number of units produced and sold
= 67,500/ 15,000 units
= 4.50 per unit
Fixed cost per unit = Total fixed cost/ number of units produced and sold
= 150,000/ 15,000 units
= 10.00 per unit
Total cost per unit = Variable cost per unit + Fixed Cost per unit
= 4.50 per unit + 10.00 per unit
= 14.50 per unit
Number of units Produced and Sold: 20,000
Variable Cost per unit: Variable cost per unit will remain same, i.e., 4.50 per unit irrespective of the level of output.
Total Fixed Cost: Total Fixed cost as the name suggests will remain irrespective of the level of output. Thus, total fixed cost will remain same, i.e., 150,000.
Fixed cost per unit = Total fixed cost/ number of units produced and sold
= 150,000/ 20,000 units
= 7.50 per unit
Total cost per unit = Variable cost per unit + Fixed Cost per unit
= 4.50 per unit + 7.50 per unit
= 12.00 per unit
Total Variable cost = Variable cost per unit X Number of units produced
= 4.50 per unit X 20,000 units
= 90,000
Total Costs = Total Variable cost + total Fixed Cost
= 90,000 + 150,000
= 240,000
Number of units Produced and Sold: 25,000
Variable Cost per unit: Variable cost per unit will remain same, i.e., 4.50 per unit irrespective of the level of output.
Total Fixed Cost: Total Fixed cost as the name suggests will remain irrespective of the level of output. Thus, total fixed cost will remain same, i.e., 150,000.
Fixed cost per unit = Total fixed cost/ number of units produced and sold
= 150,000/ 25,000 units
= 6.00 per unit
Total cost per unit = Variable cost per unit + Fixed Cost per unit
= 4.50 per unit + 6.00 per unit
= 10.50 per unit
Total Variable cost = Variable cost per unit X Number of units produced
= 4.50 per unit X 25,000 units
= 112,500
Total Costs = Total Variable cost + total Fixed Cost
= 112,500 + 150,000
= 262,500
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