The operations manager for an auto supply company is evaluating the potential purchase of a new machine for the production of a transmission component.   Current manufacturing costs are fixed costs of $11,000 and a variable cost of $0.50 per unit.  The new machine would have fixed cost of $4,000 and a variable cost of $0.75 per unit.  Each component is sold for $1.50 per unit.   Develop two separate models in your spreadsheet to calculate Total Profit for each option. The models must be flexible and able to calculate Total profit for any Quantity produced. ( use an excel sheet to show formulas)  .  Find the break-even quantity for each option

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...
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The operations manager for an auto supply company is evaluating the potential purchase of a new machine for the production of a transmission component.   Current manufacturing costs are fixed costs of $11,000 and a variable cost of $0.50 per unit.  The new machine would have fixed cost of $4,000 and a variable cost of $0.75 per unit.  Each component is sold for $1.50 per unit.

 

  1. Develop two separate models in your spreadsheet to calculate Total Profit for each option. The models must be flexible and able to calculate Total profit for any Quantity produced. ( use an excel sheet to show formulas) 
  2. .  Find the break-even quantity for each option 
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