# resume

## resume

If Natalia accept this offer, she will not lose money but she will gain less profit then other sales of 70000 bags. Natalia will get the profit of only \$3 instead of \$5 for her routine sales. They were producing on their 70% capacity. Their total capacity is of 100000 bags so she can produce 30000 more bags from her existing production setup. Here in this variable production cost she has \$3 for direct labour and \$2 for direct material cost so her variable total cost is \$5 and the fixed cost is \$5 so it makes sense that Natalia’s production cost is \$10 for the first bag and then after her production cost would become \$5. Now if Natalia accept this offer with Brazilian company of 20000 bags then she has to sale a bag on \$8. So she can earn \$3 from each bag because her production cost is total of \$5. After all she will not lose but make lesser money than usual.
In class qAssignment-3, Contemporary Business Management, Prof Albert Knab, Fanshawe College
IC3 Questions:
Q-1: Will Natalia lose the money if she accepts Brazilian offer? Explain.
Ans-1: If Natalia accept this offer, she will not lose money but she will gain less profit then other sales of 70000 bags. Natalia will get the profit of only \$3 instead of \$5 for her routine sales. They were producing on their 70% capacity. Their total capacity is of 100000 bags so she can produce 30000 more bags from her existing production setup. Here in this variable production cost she has \$3 for direct labour and \$2 for direct material cost so her variable total cost is \$5 and the fixed cost is \$5 so it makes sense that Natalia’s production cost is \$10 for the first bag and then after her production cost would become \$5. Now if Natalia accept this offer with Brazilian company of 20000 bags then she has to sale a bag on \$8. So she can earn \$3 from each bag because her production cost is total of \$5. After all she will not lose but make lesser money than usual.

Q-2: What factors other than costs and revenue should be...