Business, 07.04.2020 20:16 Cedars6976

Cox Electric makes electronic components and has estimated the following for a new design of one of its products:

Fixed Cost = $10,000

Material cost per unit = $0.15

Labor cost per unit = $0.10

Revenue per unit = $0.65

Note that fixed cost is incurred regardless of the amount produced. Per unit material and labor costs together make up the variable cost per unit. Assuming Cox Electric sells all that it produces; profit is calculated by subtracting the fixed cost and total variable cost from total revenue.

Choose the correct mathematical model for calculating profit.

Let q = production volume (quantity produced)

R = revenue per unit

FC = the fixed costs of production

MC = material cost per unit

LC = labor cost per unit

P(q) = total profit for producing (and selling) q units

(i) P(q) = Rq - FC - (MC)q - (LC)q

(ii) P(q) = Rq + FC + (MC)q + (LC)q

(iii) P(q) = Rq + FC - (MC)q + (LC)q

(iv) P(q) = Rq + FC + (MC)q - (LC)q

(c)

Implement your model from part (b) in Excel using the principles of good spreadsheet design and find the profit if Cox Electric makes 12,000 units of the new product.

If required, round your answer to nearest whole number. For subtractive or negative numbers use a minus sign. (Example: -300)

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Cox Electric makes electronic components and has estimated the following for a new design of one of...

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