mod 2 slp

Trident University

Osbaldo Camacho

Module 1 SLP 1

ACC: Managerial Economic

Dr. Wayne Ezelle

February 11, 2018

In my workplace today the numbers of workers have continuously increased over the months and years and the rooms have been maintained by most of the organizations internal groups. Having realized this issue with in the firm I intend to introduce production of air filters of ventilation in the firm. This will go a long way in ensuring the firm meets the increasing demand for proper ventilation in the firms and homes. The idea came after I had realized that people were exposed to dirty air that makes the health of the people especially in the firm’s risk (Cheatham & Cheatham, 2003).

The air filter is an instrument that cleans or purifies the air that goes into a system or into a house. The device helps people working in a system to breathe clean air during the operation hours. The use of air conditioner has been in existence for the last twenty years both in the office, in the factories and at different homes. The idea in the firm will help in creating a business opportunity which will raise the profits. The garget will eliminate the dust and other viruses in the air thus leaving a purified air for human consumption. The purification will improve the health of the workers in a system (Jarvaise, Drezner & Norton, 2016).

To come up with an effective gadget that can be sold in all markets considering that the market is saturated with products being manufactured quality has to of high standards. High quality means good capital invested so as to come with a good product. An estimation drawn was drawn on the production of an item. Some of the costs that have to be incurred are fixed cost, overhead costs like electricity, labor and component costs .

Elements	Estimated cost is $
Overhead costs	5.2
Components costs	3.4
Fixed costs	3.0
Labour costs	9.0
Total	20.6

The pricing shall be determined by the production cost, market prices and market forces that is the power of demand and supply. For this case, the pricing shall range between $28 to $40 depending on the market and the added values. The intention of such pricing is to cover all the production cost, transport and the profits expected. All businessmen and women intend to make a profit as that is the main driving force in business this means that the selling price should be fair to the customers but also allows the firm to get its due benefits to continue operating. When the production increases the selling price will definitely go down since there are factors that remain constant thus are not affected by mass production (Cheatham & Cheatham, 2003).

Production becomes cheaper when quantity produced goes up. Fixed cost like tear and where will remain unchanged, labour cost will also reduce proportionally since the same labour will increase production at a reduced cost and component cost will also reduce since the purchase shall be done in bulk. The final transport further reduces it by the end of the production one unit of ait filter will cost less than $ 15 dollars for the generic and less than $30 for the original brand (Cheatham & Cheatham, 2003).

The firm's production is expected to grow by 205 yearly meaning in the first year the firm will produce 700 units which will increase to 840 and 1000 in the two subsequent years. Finally, the profits are expected to increase in the subsequent years. The results will raise the economic status of the firm to an international level and be able to cover the initial costs (Jarvaise, Drezner & Norton, 2016).

References

Cheatham, C., & Cheatham, L. (2003). Updating standard cost systems. Westport, Conn: Quorum Books.

Jarvaise, J., Drezner, J., & Norton, D. (2016). The defense system cost performance database. Santa Monica, CA: Rand.

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