[Solved] Assignment 21134

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Subject: General Questions / General General Questions
QuestionDrill Quest, Inc. manufactures drill bits for the oil industry. Drill Quest uses cost-plus pricing to set the price of its bits. Currently Drill Quest applies a 50 percent markup on average total cost. Average variable cost of producing bits is constant and equal to $6,000 per bit. Total fixed cost at Drill Quest is $550,000. DrillQuest currently produces 690 bits. Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits):1. Using cost-plus pricing, Drill Quest prices its bits at $ per bit.A. $10,195 B. $12,175 C. $797D. $6,000 E. $6,7972. Using the cost-plus price in question 2, Drill Quest earns profit of (approximately) $ by selling 690 bits.A. $2,895,000 B. $2,345,000 C. $3,500,000 D. $3,895,000 E. $4,895,0003. Use the MR= SMCapproach to finding the profit-maximizing point on the demand for Drill Quest’s bits. The profit-maximizing number of bits to sell isA. 250B. 300C. 350D. 400E. 4504. Use the MR= SMCapproach to finding the profit-maximizing point on the demand for Drill Quest’s bits. The profit-maximizing price to charge is $ per bit.A. $15,000 B. $12,500 C. $10,378 D. $10,245 E. $10,0005. Use the MR= SMCapproach to finding the profit-maximizing point on the demand for Drill Quest’s bits. The maximum possible profit is $ .A. $2,895,000 B. $2,345,000 C. $3,500,000 D. $3,895,000 E. $4,895,0006. If Drill Quest wishes to use cost-plus pricing, it can maximize profit by applying a markup of percent on .A. 150 percent; AVCB. 150 percent; ATCC. 50 percent; AVCD. 50 percent; ATCE. 250 percent; AVC

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