Cox Electric makes electronic components and has estimated the following for a new design of one of its products:
Fixed cost = $10,000 Material cost per unit = $0.15 Labor cost per unit = $0.10 Revenue per unit = $0.65 These data are given in the file CoxElectric. Fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue.
a. Build an influence diagram that illustrates how to calculate profit.
b. Using mathematical notation similar to that used for Now lin Plastics, give a mathematical model for calculating profit.
c. Implement your model from part b in Excel using the principles of good spreadsheet design.
d. If Cox Electric makes 12,000 units of the new product, what is the resulting profit?

  • CreatedNovember 21, 2015
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