Sales and marketing cost $150,000/year Operating and maintenance cost S25/operating hour Production time/1,000 units 100 hours Packaging and shipping cost s0.50/unit Planning horizon 5 years Minimum attractive rate of return 15% The managers would like to know the viability of this product and how it would roll out in sales. (a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable? (b) If the target revenue is from 30,000 units sold, what is the expected profit? (c) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment (d) Provide graph for (a)
Sales and marketing cost $150,000/year Operating and maintenance cost S25/operating hour Production time/1,000 units 100 hours Packaging and shipping cost s0.50/unit Planning horizon 5 years Minimum attractive rate of return 15% The managers would like to know the viability of this product and how it would roll out in sales. (a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable? (b) If the target revenue is from 30,000 units sold, what is the expected profit? (c) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment (d) Provide graph for (a)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Submit your complete handwritten solution with graph.
The Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to managemer
Sales price
$17.50/unit
Equipment cost
$250,000
Incremental overhead cost
$50,000/year
Sales and marketing cost
S150,000/year
Operating and maintenance cost $25/operating hour
Production time/1,000 units
100 hours
Packaging and shipping cost
S0.50/unit
Planning horizon
5 years
Minimum attractive rate of return 15%
The managers would like to know the viability of this product and how it would roll out in sales.
(a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable?
(b) If the target revenue is from 30,000 units sold, what is the expected profit?
(C) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment?
(d) Provide graph for (a)
Transcribed Image Text:Complete the following worksheet and then use it to calculate the coefficient of determination.
1.
15
160
175.486
2.208
196.000
2.
13.5
220
197.774
565.203
2,116.000
3
16.5
140
153.197
432.765
1,156.000
4.
14.5
190
182.915
79.477
256.000
17
120
145.768
797.046
2,916.000
6.
16
160
160.627
178.837
196.000
13
200
205.204
973.690
676.000
8.
18
150
130.909
1,856.834
576.000
6.
12
210
220.063
2,121.800
1,296.000
10
15.5
190
168.056
35.331
256.000
Total
7,043.191
9,640.000
The coefficient of determination (r) is
According to the regression model, which of the following is the best estimate together with the 95 percent prediction interval of paint sale
thousands of gallons) in a sales region where the selling price is $12.50?
O 212.620 + 2(18.017)
409.370 a 2(3.190)
409.370 + 2(18.017)
O 212.620 + 2(3.190)
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