Cox Electric Breakeven Analysis Parameters Revenue per Unit Fixed Costs Material Cost per Unit Labor Cost per Unit Model Production Volume Total Revenue Material Cost Labor Cost Fixed Cost Total Cost Profit $0.65 $10,000.00 $0.15 $0.10 Cox Electric makes electronic components. The Excel file coxelectric.xlsx contains estimations for a new design of one of its products. The parameters and their estimated values are: Fixed costs $10,000 Material cost per unit = $0.15 Labor cost per unit = $0.10 Revenue per unit = $0.65 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all the products it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Prepare an Excel file with the following computations 1. Implement a model for calculating profit in Excel. If Cox Electric makes 12,000 units of the new product, what is the resulting profit? 2. Construct a One-Way Data Table with production volume as the column input and profit as the output. Vary production volume from 0 to 100,000 in increments of 10,000. In which interval of production volume does breakeven occur? (Hint: 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.) 3. Construct a Two-Way Data Table with production volume as the column input, material cost per unit as the row input, and profit as the output. Vary production volume from 0 to 100,000 in increments of 10,000. Vary material cost per unit with values $0.15, $0.20, $0.25, and $0.30. 4. Use Goal Seek to find the exact breakeven point. Use the values in Question 1 as the estimated values of the parameters. (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.)
Cox Electric Breakeven Analysis Parameters Revenue per Unit Fixed Costs Material Cost per Unit Labor Cost per Unit Model Production Volume Total Revenue Material Cost Labor Cost Fixed Cost Total Cost Profit $0.65 $10,000.00 $0.15 $0.10 Cox Electric makes electronic components. The Excel file coxelectric.xlsx contains estimations for a new design of one of its products. The parameters and their estimated values are: Fixed costs $10,000 Material cost per unit = $0.15 Labor cost per unit = $0.10 Revenue per unit = $0.65 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all the products it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Prepare an Excel file with the following computations 1. Implement a model for calculating profit in Excel. If Cox Electric makes 12,000 units of the new product, what is the resulting profit? 2. Construct a One-Way Data Table with production volume as the column input and profit as the output. Vary production volume from 0 to 100,000 in increments of 10,000. In which interval of production volume does breakeven occur? (Hint: 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.) 3. Construct a Two-Way Data Table with production volume as the column input, material cost per unit as the row input, and profit as the output. Vary production volume from 0 to 100,000 in increments of 10,000. Vary material cost per unit with values $0.15, $0.20, $0.25, and $0.30. 4. Use Goal Seek to find the exact breakeven point. Use the values in Question 1 as the estimated values of the parameters. (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.)
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