Reference no: EM132967878

Problem 1: Calculate the break-even point for the toy company under each of the two different scenarios using a spreadsheet.

Scenario:

Joe Smith is making a toy that keeps smaller children entertained for hours longer than usual for that age group. He believes parents will buy this toy for this reason. The toy will be sold for $40. Mr. Smith needs to determine the costs of the toy. He also needs the required number of toys needed to be sold before earning a profit (the break-even point). After researching the costs to produce the toy, Mr. Smith has two locations in mind. Included are associated costs for those two facilities:

• The rent for the Facility 1 (small facility) is $2,500 per month, insurance $880 per month, and other fixed costs are estimated at $3,100 per month. Facility 1 has a capacity to produce 100 /month at a variable cost for each toy of $4.00.
• The rent for Facility 2 (larger facility) is $6,000 per month, insurance $1,000 per month, and other fixed costs are estimated at $3,800 per month. Facility 2 has the ability to produce 400 toys/ month at a variable cost for each toy of $4.00 (the same as Facility 1)