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1. [39 Points] Sackville Plastics (SP) is considering adding a new product to its product line. The Oyster is a hard-shell case for tablet computers,

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1. [39 Points] Sackville Plastics (SP) is considering adding a new product to its product line. The Oyster is a hard-shell case for tablet computers, designed for those using tablets in more demanding environments. Producing this product will require the acquisition of a set of molds that can be used with injection molding equipment that SP already has. The molds will cost $90,000. Materials and labour are estimated to average $5.40 per unit, regardless of size. The Oyster will sell to distributors for an estimated $9.00. a) [4 point] Construct revenue, cost, and profit functions for the Oyster. b) [4 point] How many units must SP sell to breakeven? What is the breakeven sales? c) [9 points] Construct a graph of the revenue, cost and profit functions and identify the breakeven point. Label all lines and axes. d) [3 point] Suppose that they estimate that demand will be 10,000 units per year. How long will it take for them to breakeven? e) [4 point] How many units must they sell to achieve a profit of 40% of total costs? f) [4 point] How many units must they sell to achieve a profit of 20% of revenues? g) [5 point] Office Warehouse, a national chain of office supply stores, wants to be the exclusive distributor of the Oyster and has guaranteed to purchase 60,000 units over the next two years. What is the lowest price that Sackville Plastics can sell the Oyster for and still breakeven in 2 years? h) [3 point] Using Excel, build the basic breakeven model for part a) above. Once the spreadsheet is built, press Ctrl and * keys at the same time and your spreadsheet should flip to formula view. Take a screen shot of your spreadsheet

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