PortaCom manufactures notebook computers and related equipment. PortaCom\'s prod
ID: 2623807 • Letter: P
Question
PortaCom manufactures notebook computers and related equipment. PortaCom's product design group developed a prototype for a new high-quality portable printer. The new printer features an innovative design and has the potential to capture a significant share of the portable printer market. Preliminary marketing and financial analyses provided the following selling price, first-year administrative cost, and first-year advertising cost:
In the simulation model for the PortaCom problem, the preceding values are constants and are referred to as parameters of the model.
Selling price = $284 per unit Administrative cost = $500,000 Advertising cost = $700,000Explanation / Answer
a. Engineer's profit estimate is shown below:
b. Financial analyst's profit estimate is shown below:
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Sales (18,500 units * 284/unit) 5,254,000 Direct labor (18,500 units * 50/unit) 925,000 Parts cost (18,500 units * 88/unit) 1,628,000 Gross margin (sales - direct labor - parts cost) 2,701,000 Administrative cost 500,000 Advertising cost 700,000 Profit (gross margin - admin cost - advertising cost) 1,501,000