Question

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 $900,000. The variable cost, which includes material, labor, and shipping costs, is uncertain. The Normal Probability Distribution with an average of $200 and a standard deviation of $12 is assumed to be a good description of the variable cost. The demand for the product is expected to be between 20,000 units and 30,000 units (Integer Uniform Distribution). The product will sell for $250 per unit.
Required:
A) Develop a what-if spreadsheet model computing profit for this product in the base case, worst-case, and best-case scenarios.
Best-case profit: $ ________
Worst-case profit: $ _______
Base case profit: $ ________

Answer 1

600 because 30000/250