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
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
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(Use an excel file to show formulas used)
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fed18415a-af27-44e8-aa80-ad5d454cc154%2Fff385f06-4184-478e-8d0a-ab39cc91250d%2F8daa34a_processed.jpeg&w=3840&q=75)
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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