Problem 1 (20 Points)

An operations manager for a small semiconductor plant wants to conduct a break-even analysis to determine how many units he would have to produce such that the total revenues equal the total cost. Fixed cost are assumed to be $150 per day whereas variable cost are $1.50 per unit produced. Each unit will generate $2.50 in revenues.

a. Generate a line plot or a scatterplot in Excel that graphs the total costs as well as the total revenues (both on the y-axis) as a function of how many units are produced (on the x-axis). Use a scale from 0 to 300 units on the x-axis. (5 Points)

b. Looking at the graph produced in part a), what do you think will be the break-even point between total costs and total revenues? (5 Points)

c. Using Excels GoalSeek procedure determine the break-even point. (5 Points)

d. Now use algebra to analytically find the break-even point. (5 Points)