Scribd
Upload
43 views3 pages

Hmework 5

Madeira Computing is evaluating a new wearable electronic device with a fixed launch cost of $300,000 and a variable cost ranging from $160 to $240, with a most likely value of $200. The selling price is set at $300 per unit, and demand is expected to vary from 0 to 20,000 units, with 4,000 units being the most likely. Profit scenarios indicate potential profits ranging from -$300,000 in a worst-case scenario to $2,500,000 in a best-case scenario, depending on variable costs and demand levels.

Uploaded by

Yo Tu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
43 views3 pages

Hmework 5

Madeira Computing is evaluating a new wearable electronic device with a fixed launch cost of $300,000 and a variable cost ranging from $160 to $240, with a most likely value of $200. The selling price is set at $300 per unit, and demand is expected to vary from 0 to 20,000 units, with 4,000 units being the most likely. Profit scenarios indicate potential profits ranging from -$300,000 in a worst-case scenario to $2,500,000 in a best-case scenario, depending on variable costs and demand levels.

Uploaded by

Yo Tu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Selling Price 300

Varible Cost c Quantity


Fixed Cost 300,000 0
Demand d

Profit (50-c)*d-300,000

Base Case Profit


Selling Price 300
Varible Cost 200
Fixed Cost 300,000
Demand 4000

Profit 100,000

Worse Case Profit


Selling Price 300
Varible Cost 240
Fixed Cost 300,000
Demand 0

Profit -300000

Best Case Profit


Selling Price 300
Varible Cost 160
Fixed Cost 300,000
Demand 20,000

Profit 2,500,000
The management of Madeira Computing is considering the introduction of a wearable electronic
device with the functionality of a laptop computer and phone.
The fixed cost to launch this new product is $300,000.
The variable cost for the product is expected to be between $160 and $240, with a most likely value
of $200 per unit.
The product will sell for $300 per unit.
Demand for the product is expected to range from 0 to approximately 20,000 units, with 4,000 units
the most likely.
Fixed cost to begin the production of the product = $30,0000.
Selling price of the new product = $300 per unit.
Variable cost per unit between $160 to $240 with most likely to be $200. (Denoting it as c)
The demand varies between 0 to 20,000 units with most likely being 4000 units. (Denoting it as d)
Ans: Profit model for this product is Profit = (300 – c)*d – 30,0000
rable electronic

a most likely value

ts, with 4,000 units

it as c)
enoting it as d)

You might also like