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# [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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