Question
Chesapeake Development Corporation (CDC) is a small real estate developer that builds one style of house. The selling price of the house is $460,000. The
Chesapeake Development Corporation (CDC) is a small real estate developer that builds one style of house. The selling price of the house is $460,000. The monthly fixed cost is $160,000. This includes salaries, office lease and supply costs. The variable cost for each house is $420,000. This includes cost of land, material, labor, and sales commission. This means, for example, if 2 houses are sold, the profit is (460,000 - 420,000)*2 - 160,000. a) Let x = sales volume (number of houses sold). Write the profit as a fuction of x. b) Build a model in Excel here to compute total monthly profit. If 10 houses are built and sold in a month, what is the profit for that month? c) Indicate what you would enter in GoalSeek to determine the break-even volume,i.e., in: Set Cell, To value, and Changing Cell. What is the break-even volume? d) With Excel's Data Table, build a table with profits for sales volume = 1, 2, ..., 12. Make a line chart of profit. Make sure correct sales volumes (1, 2, ..., 12) appear on the horizontal axis.
b) Give the profit for 10 houses (e.g., 123,456).
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c) Give the break-even volume (e.g., 12).
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c) What was your changing cell in GoalSeek? (e.g., B2)
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d) For your Data Table, what Excel formula did you enter in cell C33?
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d) In your Data Table, what Excel formula is in cell C34? To avoid getting stuck in the Data Table, after copying the formula in that cell, hit Escape to leave that cell.
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Data | |||
Fixed Cost | $160,000 | ||
Variable Cost Per Unit | $420,000 | ||
Selling Price Per Unit | $460,000 | ||
Variable | |||
Sales Volume | |||
Model | |||
Total Revenue | |||
Total Cost | |||
Total Profit (Loss) |
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