Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cox Electric makes electronic components and has estimated the following for a new design of one of its products: Fixed Cost = $7,000 Material cost
Cox Electric makes electronic components and has estimated the following for a new design of one of its products:
Fixed Cost = $7,000
Material cost per unit = $0.15
Labor cost per unit = $0.10
Revenue per unit = $0.65
Production Volume = 12,000
Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all it produces, build a spreadsheet model that calculates the profit by subtracting the fixed cost and total variable cost from total revenue, and answer the following 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 = total cost, yielding a profit of zero. Vary production volume from 5,000 to 50,000 in increments of 5,000. 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. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started