A more detailed investigation now has provided better estimates of the data for the problem. The research-and-development cost still is estimated to be $10 million, but the new estimate of the marginal production cost is $1,300. The revenue from each watch sold now is estimated to be $1,700.
a. Use a graphical procedure to find the new break-even point.
b. Use an algebraic procedure to find the new break-even point.
c. State the mathematical model for this problem with the new data.
d. Incorporate this mathematical model into a spreadsheet with a sales forecast of 30,000. Use this spreadsheet model to find the new break-even point, and then determine the production quantity and the estimated total profit indicated by the model.
e. Suppose that management fears that the sales forecast may be overly optimistic and so does not want to consider producing more than 20,000 watches. Use the spreadsheet from part d to determine what the production quantity should be and the estimated total profit that would result