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Acase Problem

The document discusses Molly's dry cleaning business and potential options for purchasing new equipment or lowering prices. It asks questions about Molly's current monthly volume, the additional volume needed to break even if buying new equipment, and the profits at different potential monthly volumes both with and without new equipment over the next three years.

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mariakate Lee
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46 views9 pages

Acase Problem

The document discusses Molly's dry cleaning business and potential options for purchasing new equipment or lowering prices. It asks questions about Molly's current monthly volume, the additional volume needed to break even if buying new equipment, and the profits at different potential monthly volumes both with and without new equipment over the next three years.

Uploaded by

mariakate Lee
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

1. What is Molly’s current monthly volume?

2. If Molly purchases the new equipment, how many additional


items will she Have to dry-clean each month to break even?
3. Molly estimates that with the new equipment she can
increase her volume to 4,300 items per month. What
monthly profit would she realize with that level of Business
during the next 3 years? After 3 years?
4. Molly believes that if she does not buy the new equipment
but lowers her price To Php24.75 per item, she will increase
her business volume. If she lowers her Price, what will her
new break-even volume be? If her price reduction results in
a Monthly volume of 3,800 items, what will her monthly profit
be?
5. Molly estimates that if she purchases the new equipment
and lowers her price To Php24.75 per item, her volume will
increase to about 4,700 units per month. Based on the local
market, that is the largest volume she can realistically
expect. What should Molly do?

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