Photo Co. operates four film developing plants in upstate New York. The four plants are identical. They employ the same production technology, process the same mix, and buy raw materials from the same companies at the same prices. Wage rates are also the same at four plants. In reviewing the operating results for December, the newly hired assistant controller, Mike, became quite confused over the numbers.
Plant A Plant B Plant C Plant D
Number of Rolls processed 50,000 55,000 60,000 65,000
Revenue ($000s) $500 $550 $600 $650
Less:
Variable costs (195) (242) (300) (298) (352)
Fixed costs (300) (300) (300) (300)
Profit (loss) $5 $8 $2 $2
Mike remembered from his Accounting class that as volume increases, the average fixed cost per unit falls, and so Mike expected Plant D to be more profitable that Plants A and B. But numbers show just the opposite.
Required:
1. Write a concise memo to Mike to help him understand what is going on and to eliminate his confusion.
Justify your points with appropriate calculations.

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Table 1. shows the expected demand for the dvd at different suggested donation levels, and they can act as a single-price monopolist if they choose to. thereceipts will be used to fund gstcg supplies for their data collection and conservation work. at the end of each sea turtle nesting season, any excess funds are donated by the gstcg to a local non-profit sea turtle research and rehabilitation facility. table 1 suggested anticipated total marginal profit donation per number of dvd revenue revenue dvd request requests $19.00 0 $15.00 2 $9.50 4 $7.75 10 $3.00 15 $0.00 20 a. complete table 1 by computing the total revenue, marginal revenue, and profit columns. b. the president wants the gstcg to provide videos to generate the most possible donations (total revenue). what price, if any, is the president of the gstcg favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer. c. the education outreach committee wants the gstcg to provide videos to the highest possible number of people. what price, if any, is the educational outreach committee favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer. d. the treasurer of the gstcg wants the dvd program to be as efficient as possible so that the marginal revenue equals marginal cost. what price, if any, is the treasurer favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer. e. the fundraising committee wants the dvd program to generate as much profit in donations as possible. what price, if any, is the fundraising committee favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer.

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