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Order Paper Now- What is the defined difference between average cost and marginal cost?
- Vino Bella Cellars sells the units for $4,500 each. This price does not vary with the number of units sold. How many units should Vino Bella Cellars manufacture and sell each month?
- Should Vino Bella Cellars charge more for different quantities of units? Why or why not?
- What recommendation would you make to the owners to increase their profits on this product? Explain the role of linear profit modeling within your recommendation.
Vino Bella Cellars
Vino Bella Cellars manufactures a 1,000-bottle wine storage system that maintains optimum temperature (55–57 °F) and humidity (50–80%) for aging wines. The following table depicts how average cost varies with the number of units manufactured and sold (per month):
|
Quantity |
Average Cost |
|
1 |
$ 6,000 |
|
2 |
$ 5,000 |
|
3 |
$ 4,300 |
|
4 |
$ 3,850 |
|
5 |
$ 3,550 |
|
6 |
$ 3,550 |
|
7 |
$ 3,657 |
|
8 |
$ 3,925 |
|
9 |
$ 4,300 |
|
10 |
$ 4,800 |
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