Problem
The m anagement of the Toy R4U Company needs to decide whether to introduce a certain new novelty toy for the upcoming Christmas season, after which it would be discounted. The total cost required to setup the produc tion and market this toy would be $500,000 plus $15 per toy produced. The company would receive revenue of $35 fo r each toy sold.
a. Assume that company could sell every unit of this toy produced . W rite an expression for the T otal Cost (C), Revenue (R), and Profit (P) functions for the c ompany in terms o f x , the number of units produced .
b. How many units must be produced and sold in order to break even?
c. What is the company ' s break - even point in dollars (BEP $ ) ? That is, how much is the company ' s total cost, revenue and profit at the break - even production level?
d. Find the total cost, revenue and profit when 35,0 00 toy s are made and sold.
e. If the company wants to make a profit of a million dollar s , how many units must be made and sold?
f. How many toys should be made and sold if the company wants its profit to be at least 3 5 % of the revenue ?
g.Sketch a graph of the cost, revenue, and profit functions, and identify the break - even point. For the BEP po int, clearly indicate the number of toys produced , and the corresponding cost and revenue in dollars.
h. Set up an Excel model for this problem, and use Goal Seek to find the BEP. Attach a hard copy of your Excel result to your assignment. You need to indicate the S e t cell, To v alue, and By c hanging cell , which you used in your Goal Seek window.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.