1. Barks Computer Screens Case

John Barks owns Barks Computer Screens Inc. and wants to identify the supply and demand for screens in his market. The company can produce large screens called Wides or small screens called Squares. The production processes are interchangeable, and production can be adjusted depending on market conditions. The demand for both products is highly elastic in terms of price elasticity, and customers perceive the two products as close substitutes for each other.

Barks needs some help in completing his market analysis. Therefore, he hires you as a consultant and provides you with the results of his analysis. He has found that the functions for supply and demand in his market are:

Qd = 157 – 35P + 12.5Pw + 0.1Y
Qs = –120 + 75P – 30Pw + 13PL + 12R

Where:

Qd = Demand
Qs = Supply
Pw = Average price of Wides
Y = Income in his market
PL = Price of labor
R = Is the average humidity level measured in hums

Create a report answering the following questions:

  • Assume the quantities demanded and supplied are a function of price. Given the following conditions, determine the demand and supply curves for Barks Computer Screens Inc.
    Pw = $6.00
    Y = $1,600.00
    PL = $9.00
    R = 25
  • Calculate the market conditions (shortage, surplus, or equilibrium) for Wides if the following price conditions exist in the market: $1.75, $2.10, and $2.70.
  • Determine the market equilibrium conditions in this market for Wides.
  • Summarize your recommendations or advice to Barks concerning market conditions and production levels.

Create your report in a 2- to 3-page Microsoft Word document.

2. For the final project for this course, each week, you will examine several topics regarding the economic analysis of a company and the environment in which it operates. In your report, you will use all the quantitative and qualitative tools discussed in class to examine, evaluate, and present the information requested each week.

Early in Week 1, you need to select a company of interest to you.

While selecting a company, ensure the following:

  • Information about the company is readily available.
  • The company is listed on one of the major stock exchanges.
  • The company is not a financial or insurance company.

After selecting the company, submit the associated information to the instructor, requesting approval. All information used in your research must be the most current data available.

Report 1: Content Template

Discuss the supply and demand as well as elasticity concepts of the chosen company. Incorporate these concepts into an analysis that will validate how the company establishes its pricing strategy.

In your analysis of the company:

  • Include the following information about the company and summarize your findings:
  • Where is the company's corporate office located?
  • How many years has the company been in business?
  • Where are the different markets for the company located worldwide?
  • What are the company's major product lines, and what is their significance to the company in terms of revenues and costs?
  • What are the features of the company's products? What is the degree of similarity between the features of the products?
  • Who is the company’s major competition?
  • What are the respective market shares being serviced by the company?
  • List the utilities the company's products provide to consumers.
  • Identify and enumerate the factors affecting the supply, demand, and price for the company's products.
  • Examine whether the demand for the company's products is relatively price elastic or relatively price inelastic and explain why.
  • Using multiple regression analysis, conduct an analysis of the relationship between sales levels, income levels, and the employment level in the overall economy over the last twelve months. Explain in detail your findings and recommendations using the appropriate indicators from your analysis.
  • On the basis of your analysis, suggest initiatives to improve the revenue of the company.

Create your report in a 2- to 3-page Microsoft Word document.

3. Golden Star Winery produces midlevel wines consumed primarily in North America. Given below is the projected income statement for the company for 2011.

Projected Income Statement (2011)
Sales (100,000 cases at $7 per case) / $700,000
Cost of goods sold:
Materials / $180,000
Labor / $225,000
Fixed manufacturing expenses / $45,000
Administrative and selling expenses:
Delivery / $30,000
Commissions / $50,000
Advertising / $10,000
Travel / $5,000
Fixed administrative and selling expenses / $15,000
Total expenses / $560,000
Net income before taxes / $140,000

Create a report answering the following questions:

  • Complete the following table in a fully functional Microsoft Excel spreadsheet.

Price / Quantity / Total Revenue / Total Variable Cost / Total Fixed Cost / Total Cost / Profit
$8.00 / 65,000
$7.75 / 75,000
$7.50 / 80,000
$7.25 / 90,000
$7.00 / 100,000
$6.75 / 115,000
$6.50 / 120,000
  • Using Excel, prepare a graph showing the breakeven point and any profit or loss at the current price of $7. Explain to the Golden Star management the implications of this analysis.
  • What is the elasticity coefficient for each price between $6.50 and $7.50? Is the demand elastic or inelastic at these points? How can this information be useful to management in its pricing and output decisions?
  • On the basis of your calculations and the information above, what recommendations would you make to Golden Star in terms of price and output levels?

Create your report in a 2- to 3-page Word document.

4. In Week 2, you will examine the nature and cost structure of the company you selected. Analyze the past, current, and future cost considerations of the company and, on the basis of your costs analysis, create a list of strategies to enhance the company’s profit.

In your analysis, include the following information about the various costs that affect the company:

  • Fixed costs, such as land, rent, utility bills, property taxes, mortgage payments, fire insurance, and lease on delivery trucks
  • Variable costs, such as wages of production workers or salespeople, raw materials, electric power, and inventory
  • Life cycle costs, such as acquisition, installation, operation, maintenance, refurbishment, and disposal fees
  • Operating costs, such as failures, repairs, spares, downtime, and loss of production

This report will be the next step in building your Final Term Project due in Week 5.

Create your report in a 2- to 3-page Microsoft Word document. Attach any supporting documents, such as spreadsheets, as an appendix.