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Manufacturing Cost Of a Product Is9x2 While The Company Sells It At a Rate Of 18x + 6

Referencing Styles : APA | Pages : 1

(a) The manufacturing cost of the product is 18 as per the given information and the company in that case further sells the product at cost plus profit which is 18x + 6 where profit acts as a function of x. If the function is considered as 1, then the profit of the manufacturing company is about 24.  

(b) The maximization of the profit actually depends on the production capacity of the company and further based on that the x variable works as the number of times the production of the company is enhanced. Each and every company tries to maximize the profit of the business and it further depends on the profitability position. The profit of the company further acts as the financial status in that case. The profit is maximized when the earning per share of the company is higher. The decisions of the company is particularly based on the new projects, acquisition of assets, raising capital and many more. The decisions in that case have positive along with negative impact of the company.

The profit maximization in a manufacturing firm also depends on the economic survival, measurements of standards, social welfare and many more. Most of the manufacturing firm tries to enhance the earning per share of the company. The time value of money concepts are also applied in case of the higher proposal of the profitability position of the business. There are certain risk which are also involved in case of maximizing the profit of the company as higher risk develops the question regarding the survival of the business. Due to the technological advancements in recent years, the manufacturing organizations needs to upgrade the systems accordingly. Upgradation and maintenance of the system along with the customers profile are highly significant in order to keep potential track of the business. It is important to attract the potential customers which will enhance the system as per the related growth of the company.

The profitability position of the company is further measured by the process of evaluating the key profitability ratio in order to understand the current financial status of the firm. There is a huge difference in the profit maximization and wealth maximization is that profit maximization is the short term factor whereas on the other hand wealth maximization is a long term objectives of the business. The pricing strategy of the products must be organized in such a manner so that the company can enhance the productivity of the business by selling the products at the right price. The production also depends on the capacity of the company in producing the goods at the right time. The risk must be managed which involves in the hedging in the organization risk of the business. In case of wealth maximization, the company needs to make huge investment in the project in order to bring huge return in the business. The main purpose of the wealth maximization is to enhance the future value of the firm.

The process to enhance wealth maximization is to attract the potential stakeholders in that case. The stakeholders of the company are the independent party which are the government, employees, directors and many more. In order to generate the interest of the stakeholders it is needed to make fruitful investment which will definitely bring positive return in the business. It is significant to bring positive return in the business to generate the interest of the key stakeholders. If the manufacturing company undertakes the long term projects based on the current financial status of the business in order to maximize the profitability. The improvisation of leverage in the business will rather be too risky if the company is unable to bring profit out of it. A project may be a failure which would further not motivate the key stakeholders of the business. It is the responsibility of the project management team to identify the glitches in the system and further to forecast the changes in the system of the company which may take place. The management team within the organization must be effective which will automatically enhance the performance of the company in that case.

The upper level management of the company must take relevant measures in order to enhance the profitability of the business. The internal management system of the company must be effective so that the errors within the system may be minimized. Effectiveness in the upper level management of the company will further bring transparency in the financial status of the business. The systematic upgradation of the internal management of the company will further enhance the profitability in that case. The main motive of each and every business is to enhance the profitability position along with the other factors of the firm.

The manufacturing company can maximize the profit by enhancing the profitability in that case. The development of the business mainly depends on the current norms which are applicable to the business and further the utilization of the resources which are available to the business fully and effectively. The marketing and the advertising strategy of the firm also plays significant role in the development of the performance of the business. The current status of the firm depends on the present financial status and based on that the profitability of the firm varies accordingly.      


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