Problem 12-02 (Algorithmic) The management of Madeira Manufacturing Company is c

Question

Problem 12-02 (Algorithmic)

The management of Madeira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $34,000. The variable cost for the product is expected to be between $19 and $31 with a most likely value of $23 per unit. The product will sell for $60 per unit. Demand for the product is expected to range from 700 to 2100 units, with 1100 units the most likely demand.

Develop the profit model for this product. Enter your answer in the form of an expression. (Example: (c+10)?x+800)

Profit =  

Provide the base-case, worst-case and best-case analyses. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

Explanation / Answer

solution-

Base case Profit : 1100x60- [34000+(1100x23)] = 66000 – 59300 = 6700

Worst case Profit: 700x60 – [34000+(700x31)] = 42000 – 55700 = -13700

Best case Profit : 2100x60 – [34000+(2100x19)] = 126000 - 73900 = 52100

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