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2. The operations manager for an auto supply company is evaluating the potential purchase of a new machine for the production of a transmission component. Current manufacturing costs are fixed costs of $11,000 and a variable cost of $0.50 per unit. The new machine would have fixed cost of $4,000 and a variable cost of $0.75 per unit. Each component is sold for $1.50 per unit. a. Develop two separate models in your spreadsheet to calculate Total Profit The models must be flexible and able to calculate Total profit for any Quantity for each option. produced. b. Find the break-even quantity for each option c. Graph the Total profit for each option vs Quantity (both lines on one graph) Show Quantity from 0 to 50,000

2. The operations manager for an auto supply company is evaluating the potential purchase of a new machine for the production of a transmission component. Current manufacturing costs are fixed costs of $11,000 and a variable cost of $0.50 per unit. The new machine would have fixed cost of $4,000 and a variable cost of $0.75 per unit. Each component is sold for $1.50 per unit. a. Develop two separate models in your spreadsheet to calculate Total Profit The models must be flexible and able to calculate Total profit for any Quantity for each option. produced. b. Find the break-even quantity for each option c. Graph the Total profit for each option vs Quantity (both lines on one graph) Show Quantity from 0 to 50,000

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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2. The operations manager for an auto supply company is evaluating the potential purchase of a new machine for the production of a transmission component. Current manufacturing costs are fixed costs of $11,000 and a variable cost of $0.50 per unit. The new machine would have fixed cost of $4,000 and a variable cost of $0.75 per unit. Each component is sold for $1.50 per unit. a. Develop two separate models in your spreadsheet to calculate Total Profit for each option. The models must be flexible and able to calculate Total profit for any Quantity produced. b. Find the break-even quantity for each option c. Graph the Total profit for each option vs Quantity (both lines on one graph) Show Quantity from 0 to 50,000 d. Write an interpretation of your graph
Transcribed Image Text:2. The operations manager for an auto supply company is evaluating the potential purchase of a new machine for the production of a transmission component. Current manufacturing costs are fixed costs of $11,000 and a variable cost of $0.50 per unit. The new machine would have fixed cost of $4,000 and a variable cost of $0.75 per unit. Each component is sold for $1.50 per unit. a. Develop two separate models in your spreadsheet to calculate Total Profit for each option. The models must be flexible and able to calculate Total profit for any Quantity produced. b. Find the break-even quantity for each option c. Graph the Total profit for each option vs Quantity (both lines on one graph) Show Quantity from 0 to 50,000 d. Write an interpretation of your graph
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