Reference no: EM131668725

Question: Use the spreadsheet model constructed to answer Problem to answer this problem.

a. Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value, that is, breakeven is when total revenue 5 total cost, yielding a profit of zero. Vary production volume from 0 to 100,000 in increments of 10,000. In which interval of production volume does breakeven occur?

b. Use Goal Seek to find the exact breakeven point. Assign Set cell: equal to the location of profit, To value: 5 0, and By changing cell: equal to the location of the production volume in your model.

Problem: Cox Electric makes electronic components and has estimated the following for a new design of one of its products:

Fixed cost = $10,000

Material cost per unit = $0.15

Labor cost per unit = $0.10

Revenue per unit = $0.65

These data are given in the file CoxElectric. 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. Assuming Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue.

a. Build an influence diagram that illustrates how to calculate profit.

b. Using mathematical notation similar to that used for Nowlin Plastics, 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 Cox Electric makes 12,000 units of the new product, what is the resulting profit?