PortaCom manufactures notebook computers and related equipment. PortaCom\'s prod
ID: 378649 • 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 = $249 per unit Administrative cost = $400,000 Advertising cost = $600,000Explanation / Answer
a) Variable cost=(45+90)*20000= $2700000
Total cost= 2700000+400000+600000 =$3700000
Total revenue= 249*20000 =$4980000
Profit= 4980000-3700000= $1280000
b) Variable cost= (45+100)*10000= $1450000
Total cost=1450000+400000+600000= $2450000
Total revenue= 249*10000= $2490000
Profit= 2490000-2450000=$40000
c) The simulation approach provides decision makers a more realistic depiction of how things would turn out in reality, therefore, allowing them to make better, more informed decisions.