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Homework answers / question archive / There are two ways to produce television sets; each has a different cost structure as follows: Process A Process B Unit Sales price = $120,00 unit sales price = $150,00 Unit Variable cost = $75,00 unit variable cost = $90,00 Fixed Cost = $4,500 fixed cost = $5,400 A) What is the break-even volume ( ex How many telvesion sets must be sold to Breakeven) for process A? B) if you sold 95 television sets, what would the profit be if you used process A? Process B? C) Which process ( A or B) would you choose to use if you knew with certainty that you would sell 98 television sets? What about if you knew for certainty the you would sell 100 television sets? Explain

There are two ways to produce television sets; each has a different cost structure as follows:

Process A Process B

Unit Sales price = $120,00 unit sales price = $150,00

Unit Variable cost = $75,00 unit variable cost = $90,00

Fixed Cost = $4,500 fixed cost = $5,400

A) What is the break-even volume ( ex How many telvesion sets must be sold to Breakeven) for process A?

B) if you sold 95 television sets, what would the profit be if you used process A? Process B?

C) Which process ( A or B) would you choose to use if you knew with certainty that you would sell 98 television sets? What about if you knew for certainty the you would sell 100 television sets? Explain.

D) Draw the break even graph for process A and B.

E) At what quantity will the profits or losses be the same

Quantity= Fixed Costs/(Unit Selling Price - Unit Variable Cost)

Profit = (U.S.P.)(Quantity) - [(U.V.C.)(Quantity) +Fixed Costs]

2) A manufacture is producing three types of pliers - economy, standard and deluxe - with this "unit information"

Economy Standard Deluxe

Selling Price $3.00 Selling Price $4.00 Selling Price $5.00

Metal Required- 3 oz Metal Required 7oz Metal Required 6 oz

Time Required- 10min Time Required 12 min Time Required 15 min

There is no limit on the amount of metal he can use - he only has 1,400 ounces of metal. There is also no limit on the minutes of labor he can use- he only has 4,000 minutes of labor. Each ounce of metal costs $0.04 and each minute of labor costs $0.20. The manufacturer wants to make the most money he could make and he defines his "profit" as "total revenue" which is price X quantity, less the 'cost of resources'

A) Build a "influence chart" ( with mathematical Operators adn Shapes) that shows the influence among these items:

PROFIT COST OF LABOR USED

METAL USED UNIT SELLING PRICE

LABOR USED QUANTITY MADE

TOTAL REVENUE METAL PER UNIT

MINUTES PER UNIT COST PER OUNCE

COST OF RESOURCES USED COST PER MINUTE

COST OF METAL USED

B) Indicate it the items are: dependent variables (DV), independent variables ( IND.V), intermediate variables ( INT.V.) or constants (C).

C) Show in a spreadsheet the manufacturing process.

D) Use Whats Best or Microsoft Solver for the Problem.

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