The Routines of Decision Making Math Problem Example | Topics and Well Written Essays - 500 words

The Routines of Decision Making - Math Problem Example2. The maximum purchase price for the pair of bindings is $10.00, as this is the make up of production that differs between the alternatives. In case if the price is higher, the company will be realizing a loss.3. If the production increases from 10.000 units to 12.500, the fixed be that change between the alternatives allocated to a pair of skis would be the following 10.000 / 12.500 = $0.8. The fixed cost of 100.000 should be considered when making the decision, as it does not differ between the alternatives. Since all the rest of the production costs remain unchanged, we can simply add the net change in fixed cost from the total cost of production that varies between the alternatives in company to receive the cost of production for a pair of bindings under the new circumstances 10.00 + 0.8 = 10.80.When considering the long run (30,000 sales form by the end of the trey year), the fixed overhead that varies between the altern atives per pair of bindings is only $0.33 (10.000/30.000). Under this sales volume the company should produce the bindings itself.