The Gatson Manufacturing Company Has Estimated the Following Components for a New

Essay

The Gatson manufacturing company has estimated the following components for a new product.
Fixed cost = $50,000
Material cost per unit = $2.15
Labor cost per unit = $2.00
Revenue per unit = $7.50
Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Profit is calculated by subtracting the fixed cost and total variable cost from total revenue, assuming the company sells all its produced goods.
A) Build an influence diagram that illustrates how to calculate profit.
B) Using mathematical notation, give a mathematical model for calculating profit.
C) Implement your model from part (b) in Excel using the principles of good spreadsheet design.
D) If the company decides to make 70,000 units of the new product, what will be the resulting profit?