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Unformatted text preview: a profit at least 35% of the revenue , the company has to produce and sell at least 64,517 toys.
(g) Sketch a graph of the cost, revenue, and profit functions, and identify the break even point. For the BEP point,
clearly indicate the number of toys produced, and the corresponding cost and revenue in dollars. (h) Set up an Excel model for this problem, and use Goal Seek to find the BEP. Attach a hard copy of your Excel
result to your assignment. You need to indicate the Set cell, To value, and By changing cell, which you used
in your Goal Seek window. Assignment #1 9/28/2010 2 of 7 MGSC 1205 Introduction to Quantitative Methods I Fall 2010 #2. The Special Products Company produces expensive and unusual gift to be sold in specialized stores. The latest
newproduct proposal suggests a limited edition grandfather clock. The management needs to decide whether to
introduce this product and, if so, how many of these grandfather clocks to pr oduce. If the company does go ahead
with this product, a fixed cost of $50,000 would be incurred for setting up the production facilities to produce the
product. It costs $400 for each clock produced. Each clock would generate revenue of $900 for the company. The decision Variable is x = how many grandfather clocks to produce.
Fixed cost F = $50,000
Variable cost per unit c = $400
Sell price per unit p = $900
(a) Determine the Total Cost (C), Revenue (R), and Profit (P) functions, in terms of the number of clocks made
and sold. The cost function:
The revenue function:
The profit function:
(b) Sketch a graph of the cost, revenue, and profit functions, and identify the break even point. For the BEP point,
clearly indicate the number of clocks produced, and the corresponding cost and revenue in dollars. (c) If the company anticipates that they could sell 3 00 units, how large can the setup cost be before the grandfather
clocks cease to be profitable? To breakeven when x = 300, F = ?
, where Therefore, the highest setup cost is $150,000. When the setup cost is higher...
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This note was uploaded on 01/16/2014 for the course MGSC 1205 taught by Professor Sarhan during the Fall '13 term at Dalhousie.
 Fall '13
 Sarhan

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