Would appreciate all of the help that I could get in understanding this particular concept.
A certain company manufactures products and estimates the following for a new design a product it manufactures.
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 whether the company manufactures or not. The variable cost per unit is made up of a combination of material cost per unit and labor cost per unit. Assuming that this company sells all that it produces, then, the profit is calculated by subtracting fixed cost and total variable cost from total revenue. Note that total revenue and variable cost are functions of production volume or quantity produced.
Build an influence diagram that illustrates how to calculate profit. You could click the Insert tab on the ribbon, navigate to shapes, then use circles and arrows to construct your diagram.
Build the influence diagram here
Write down a mathematical model for calculating profit using mathematical notations like in the examples we had in class with the Nowlin Plastic data. Make sure you define each notation you used afterward.
Implement the model you have in part (b) in Excel using the principles of good spreadsheet design.
Copy the model design from excel and paste it here
If the company produces 12000 units of the new product, what is the resulting profit?