Q4. Manufacturing (HW). A manufacturer is currently producing an item which has a variablecost of $0.75 per unit and a selling price of $2.00 per unit. Fixed costs are $20,000. Currentvolume is 40,000 units. The firm can produce what it believes is a better product by adding a newpiece of equipment to the process line. This equipment represents an increase of $5,000 in fixedcost. The variable cost increase would be $0.50 per unit. Volume for the new and improvedproduct should rise to 50,000 units.(a) What is total profit now?(b)What will be the profit with the new machine?(c) Should the company invest in the new equipment?

Profit = Revenue - Cost incurred Revenue = Selling price X Units sold Cost incurred = Fixed…

Answered: (a) What is total profit now? (b) What…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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4. Happy Toy Company's R&D The Happy Toy Company's R&D department is always looking for great ideas for new toys. On average, the R&D department generates about 10 new toy ideas a week. To go from idea to approved product, the idea must go through 5 stages: Pr(Fail) = 40% Pr(Fail) = 50% Pr(Fail) = 65% Pr(Fail) = 80% Initial Safety testing Focus Final decision Mockup screening group In initial screening a staff member spends 2 hours considering the idea. In mock-up, the idea is sent to one of many suppliers to produce a physical mock-up of the toy. There is essentially unlimited capacity at this stage, but it takes 4 days to get the mockup built even though multiple mockups can be built simultaneously. In safety testing each idea requires 2 days from a staff member to have the idea checked for safety. In focus groups each idea requires 3 hours from a staff member to have the idea test marketed. Finally, the management team meets for 4 hours per idea to decide if the toy should be added…
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(a) What is total profit now? (b) What will be the profit with the new machine? (c) Should the company invest in the new equipment?