Question: in EXCEL, Remember to identify variables with labels and create formulas referencing cell variable values to compute answers 10. Easy-Tech Soft ware Corporation is evaluating

in EXCEL, Remember to identify variables with labels and create formulas referencing cell variable values to compute answers

10. Easy-Tech Soft ware Corporation is evaluating the production of a new soft ware product to compete with the popular word processing soft ware currently available. Annual fi xed costs of producing the item are estimated at $150,000, and the variable cost is $10 per unit. Th e current selling price of the item is $35 per unit, and the annual sales volume is estimated at 50,000 units. (a) Easy-Tech is considering adding new equipment that would improve soft ware quality. Th e negative aspect of this new equipment would be an increase in both fi xed and variable costs. Annual fi xed costs would increase by $50,000 and variable costs by $3. However, marketing expects the better-quality product to increase demand to 70,000 units. Should Easy-Tech purchase this new equipment and keep the price of their product the same? Explain your reasoning.

(b) Another option being considered by Easy-Tech is the increase in the selling price to $40 per unit to off set the additional equipment costs. However, this increase would result in a decrease in demand to 40,000 units. Should Easy-Tech increase its selling price if it purchases the new equipment? Explain your reasoning.

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