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Case 1-1 Keeping Time Founded nearly 50 years ago by Alfred Lester-Smith, Beautiful Clocks specializes in developing and marketing a diverse line of large ornamental clocks for the finest homes. Tastes have changed over the years, but the company has prospered by continually updating its product line to satisfy its affluent clientele. The Lester-Smith family continues to own a majority share of the company and the grandchildren of Alfred Lester-Smith now hold several of the top managerial positions. One of these grandchildren is Meredith Lester-Smith, the new CEO of the company, Meredith feels a great responsibility to maintain the family heritage with the company. She realizes that the company needs to continue to develop and market exciting new products. Since the 50th anniversary of the founding of the company is rapidly approaching, she has decided to select a particularly special new product to launch with great fanfare on this anniversary. But what should it be? As she ponders this crucial decision, Meredith's thoughts go back to the magnificent grandfather clock that her grandparents had in their home many years ago. She had admired the majesty of that clock as a child. How about launching a modern version of this clock? This is a difficult decision. Meredith realizes that grandfather clocks now are largely out of style. However, if she is so nostalgic about the memory of the grandfather clock in her grandparents' home, wouldn't there be a considerable number of other relatively wealthy couples with similar memories who would welcome the prestige of adding the grandeur of a beautifully designed limited- edition grandfather clock in their home? Maybe. This also would highlight the heritage and continuity of the company. It all depends on whether there would be enough sales potential to make this a profitable product. Meredith had an excellent management science course as part of her MBA program in college, so she realizes that break-even analysis is needed to help make this decision. With this in mind, she instructs several staff members to investigate this prospectiv product further, including developing estimates of the related costs and revenues as well as forecasting the potential sales. One month later, the preliminary estimates of the relevant financial figures come back. The cost of designing the grandfather clo and then setting up the production facilities to produce this product would be approximately $250,000. There would be only one production run for this limited-edition grandfather clock. The additional cost for each clock produced would be roughly $2,000. The marketing department estimates that their price for selling the clocks can be successfully set at about $4,500 apiece, but a fit forecast of how many clocks can be sold at this price has not yet been obtained. However, it is believed that the sales likely woul reach into three digits. Meredith wants all these numbers pinned down considerably further. However, she feels that some analysis can be done now to draw preliminary conclusions. a. Assuming that all clocks produced are sold, develop a spreadsheet model for estimating the profit or loss from producing any particular number of clocks. b. Use this spreadsheet to find the break-even point by trial and error