Cox Electric makes electronic components and has estimated the following for a new design of one of its products. Fixed cost $12,750 • Material cost per unit = $0.16 • Labor cost per unit $0.12 • Revenue per unit $0.62 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 that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Construct an appropriate spreadsheet model to find the profit based on a given production level and use the spreadsheet model to answer these questions. (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 = the 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? to units (b) Use Goal Seek to find the exact breakeven point. Assign Set cell: equal to the location of profit, To value: 0, and By changing cell: equal to the location of the production volume in your model. units
Cox Electric makes electronic components and has estimated the following for a new design of one of its products. Fixed cost $12,750 • Material cost per unit = $0.16 • Labor cost per unit $0.12 • Revenue per unit $0.62 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 that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Construct an appropriate spreadsheet model to find the profit based on a given production level and use the spreadsheet model to answer these questions. (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 = the 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? to units (b) Use Goal Seek to find the exact breakeven point. Assign Set cell: equal to the location of profit, To value: 0, and By changing cell: equal to the location of the production volume in your model. units
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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Transcribed Image Text:Cox Electric makes electronic components and has estimated the following for a new design of one of its products.
• Fixed cost = $12,750
• Material cost per unit = $0.16
• Labor cost per unit = $0.12
• Revenue per unit - $0.62
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 that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total
variable cost from total revenue.
Construct an appropriate spreadsheet model to find the profit based on a given production level and use the spreadsheet model to
answer these questions.
(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 the 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?
to
units
(b) Use Goal Seek to find the exact breakeven point. Assign Set cell: equal to the location of profit, To value: 0, and By
changing cell: equal to the location of the production volume in your model.
units
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