Question: [COST/REVENUE/PROFIT]. You are in charge of the product line for Product R . Your

product sells for $ 930 per unit. The number of units " x " of this product produced

and sold during two successive sales periods, and the total COST " C " associated with

producing these units is shown below…

Units Produced/ Sold " x " Total COST " C "

Period 1 500 $ 744,000

Period 2 1, 325 $ 1,140,000

1. [ 2 ] Use the "two-point" approach to develop a linear model for total COST in the
   slope-intercept form C = ( x ).
2. [ 1 ] Develop the linear total REVENUE model R = ( x ).
3. [ 1 ] Develop the linear total PROFIT model P = ( x ).
4. [ 10 ] Use Excel’s Chart Wizard feature to plot data points for the COST, REVENUE
   and PROFIT models for this product on the same graph. Use a trend line to represent
   each set of data points, and indicate the trend line’s equation on the graph.
5. [ 6 ] Identify and interpret the values that represent marginal COST " m C ", marginal
   REVENUE " m R " and marginal PROFIT " m P "
6. [ 6 ] Identify and interpret the values that represent the vertical intercepts for total
   COST " C ", total REVENUE " R " and total PROFIT " P ".
7. [ 3 ] Forecast the COST " C ", REVENUE " R " and PROFIT " P " associated with a
   production and sales level " x " of 500 units.
8. [ 3 ] How many units " x " must be produced and sold so that R _(x) = C _(x) ? Calculate
   " C _{(x )} " and " R _(x) " at this value of " x ".
9. [ 2 ] How many units " x " must be produced and sold so that P _(x) = 0 ?
10. [ 1 ] Corporate headquarters has set $ 306,000 as the company’s PROFIT expectation
    for the next sales period. What sales level " x " is necessary to meet this expectation?
11. [ 3 ] Assume this company had the plant capacity to produce as many units of this

product as market conditions would permit to be purchased. How many units " x "

should be produced and sold during the next sales period to maximize REVENUE

" R " and PROFIT " P " if market research forecasts consumer demand to be 1,310

units? Estimate maximum REVENUE and PROFIT under these conditions?

Price: $2.99

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