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Boater Radio produces handheld VHF radios for boating enthusiasts who like to talk to other boats on the open water. It is scheduled to produce and sell 5,000 radios next month. It expects to record sales of $500,000, variable costs of $300,000 and ?xed costs of $135,000. It has received an offer from the Coast Guard to buy 1,000 radios if they can be delivered next month at a price of $75 per radio. The dif?culty is that Boater Radio can produce at most 5,500 radios in one month. Therefore it would have to cut back on its regular sales if it decides to accept the offer from the Coast Guard.
Problem 1: Create a model of this problem in Google Sheets
Problem 2: What is the result if the company accepts the offer?
Problem 3: How does it compare to the existing business?
Problem 4: Regardless of the result above, Boater does not really want to reduce existing sales so much. If they counter-offer to sell the Coast Guard 900 radios, what is the minimum price that they can charge so that their operatingpro?t will not decline?
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