The Gatson manufacturing company has estimated the following components for anew product. Fixed cost = $50,000 Material cost per unit = $2.15 Labor cost per unit = $2.00 Revenue per unit = $7.50 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Profit is calculated by subtracting the fixed cost and total variable cost from total revenue, assuming the company sells all its produced goods.
a. Build an influence diagram that illustrates how to calculate profit.
b. Using mathematical notation, give a mathematical model for calculating profit.
c. Implement your model from part (b) in Excel using the principles of good spreadsheet design.
d. If the company decides to make 70,000 units of the new product, what will be the resulting profit?
b. Let, q = production volume
R = revenue per unit
FC = the fixed costs of production
MC = material cost per unit
LC = labor cost per unit
P(q) = total profit for producing (and selling) q units
P(q) = (R) × (q) – FC – (MC) × (q) – (LC) × (q)
You might also like to view...
Which of the following is an example of focusing disproportionate effort on high-profit customers?
A) In addition to bicycles, 2Wheels sells biking gear such as helmets, bottles, jackets and other accessories. B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them. C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city. D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model. E) 2Wheels encourages customers to send in their suggestions for product improvement.
An attorney-in-fact is the label given to an agent whose authority is:
A. assumed after the death of the principal. B. in writing. C. apparent. D. implied.
A visual or set of data from a published source can be used in a report without citing it
Indicate whether the statement is true or false
The formal ____________________ model of human resource planning forecasts human resource needs based upon probabilities of such changes.
Fill in the blank(s) with the appropriate word(s).