MGMT 3213 Problem 2: Cost-Volume Analysis

• All analysis and calculations and report must be done in a single (ONE) Excel file.
• Put your name at the top of the worksheet.
• Make Excel do all of the calculations. . (Instructor must be able to see your cell-reference formulas.)
• Include graph interpretation below the graph. Make sure it is clear, complete, and easy to find.

2. A manager is trying to determine which of three production processes to implement to produce a component for a new product line. Process A would entail a variable cost of $17 per unit and an annual fixed cost of $150,000. Process B would entail a variable cost of $11 per unit and an annual fixed cost of $250,000. Process C would entail a variable cost of $20 per unit and an annual fixed cost of $180,000.

1. Develop three separate models in your spreadsheet to calculate Total cost for each process. The models must be flexible and able to calculate Total cost for any Quantity produced.

2. Create a Cost-Volume graph that shows total cost lines for all three options. (Volume should range from 0 to 30,000)

3. Write an interpretation of your graph