Question

Cost-Volume Analysis

Include graph interpretation below the graph. Make sure it is clear, complete, and easy to find.

A manager is trying to determine which of three production processes to implement to produce a component for a new product line. Process A would entail a variable cost of $17 per unit and an annual fixed cost of $150,000. Process B would entail a variable cost of $11 per unit and an annual fixed cost of $250,000. Process C would entail a variable cost of $20 per unit and an annual fixed cost of $180,000.

a. Develop three separate models in your spreadsheet to calculate Total cost for each process.

            The models must be flexible and able to calculate Total cost for any Quantity produced.

b. Create a Cost-Volume graph that shows total cost lines for all three options.

            (Volume should range from 0 to 30,000)

c. Write an interpretation of your graph

Please show the formula that used if possible.

Answer 1