Question

Question Set 3. A small manufacturing plant produces specialized stainless steel valves for high-pressure steam systems. Each valve costs $2000 to produce. The plant incurs $1,200,000 in fixed annual costs. The plant sells the valves directly to power plants for $6400 each. For this question set, use the following formulas:

[Total Profit] = [Total Revenue] – [Total Cost]

[Total Revenue] = [Production] x [Unit Revenue]

[Total Cost] = [Production] x [Variable Unit Cost] + [Fixed Costs]

1. Create a data table (as demonstrated during lab exercise 2), that shows what total profit would be if the company produced 100 to 400 valves, in increments of 20. You must use a data table structure to receive credit for this problem. (6pts)

2. Create a scatter chart that displays the variable total profit (and no other variables) as a function of the number of valves produced and sold. At low production quantities, total profit may be negative but should still be displayed. Label your chart axes appropriately. (6pts)

Answer 1

Production (Units)	Total Variable costs	Fixed costs	Total Costs	Total Revenue	Total Profit
(A)	(A * $2000)	(B)	(VC + FC)	(A * $6400)	(Total costs - Total Revenue)
100	$200,000	$1,200,000	$1,400,000	$640,000	$760,000
120	$240,000	$1,200,000	$1,440,000	$768,000	$672,000
140	$280,000	$1,200,000	$1,480,000	$896,000	$584,000
160	$320,000	$1,200,000	$1,520,000	$1,024,000	$496,000
180	$360,000	$1,200,000	$1,560,000	$1,152,000	$408,000
200	$400,000	$1,200,000	$1,600,000	$1,280,000	$320,000
220	$440,000	$1,200,000	$1,640,000	$1,408,000	$232,000
240	$480,000	$1,200,000	$1,680,000	$1,536,000	$144,000
260	$520,000	$1,200,000	$1,720,000	$1,664,000	$56,000
280	$560,000	$1,200,000	$1,760,000	$1,792,000	-$32,000
300	$600,000	$1,200,000	$1,800,000	$1,920,000	-$120,000
320	$640,000	$1,200,000	$1,840,000	$2,048,000	-$208,000
340	$680,000	$1,200,000	$1,880,000	$2,176,000	-$296,000
360	$720,000	$1,200,000	$1,920,000	$2,304,000	-$384,000
380	$760,000	$1,200,000	$1,960,000	$2,432,000	-$472,000
400	$800,000	$1,200,000	$2,000,000	$2,560,000	-$560,000