Read problem 6, Chapter 10, page 336. Based on the Profit Model, which you can find as an Excel file titled “Profit Model” , answer the following questions:
- The assumption is that the best production quantity to maximize average profit is 140 units. Use your analysis skills by looking at the data to determine if you, as a business decision maker, would pursue this. Explain why or why not!
- What does the decision table suggest? Is this a good investment? Why or why not?
Please provide your answers in a Word document following APA guidelines
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Sheet1
| Profit | Model | ||||||||
| Model Inputs | |||||||||
| Unit Price | $1,000.00 | ||||||||
| Unit Cost | $600.00 | ||||||||
| Fixed Cost | $50,000.00 | ||||||||
| Demand | 140 | ||||||||
| Quantity Sold | |||||||||
| Revenue | $140,000.00 | ||||||||
| Quantity Produced | |||||||||
| Variable Cost | $84,000.00 | ||||||||
| $6,000.00 | |||||||||
| Quantity Produced ( 120 ) | Quantity Produced (130 ) | Quantity Produced ( 140 ) | Quantity Produced (150 ) | Quantity Produced (160 ) | |||||
| -$4,077.20 | -$2,668.80 | -$1,260.40 | -$4,983.00 | -$8,705.60 |
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