# Variable Cost

Illumina Inc. makes cardboard signs. The most popular signs they make are the Bronx, and Veterans, which require material and labor. They have a contract with Devon Publishing to make 1600 of the Bronx, which sell for $ .75 and require 20 ounces of paper and 5 minutes of labor. They plan on making 2000 of the Veterans, which sell for $1.10 and require 25 ounces of paper and 10 minutes of labor. Paper cost $.01 an ounce and labor cost $.05 a minute The Company can get 27000 ounces of paper and 80000 minutes of labor.

Construct a spreadsheet model and compare the company's plan with the resource limitations. Use the following order on your spreadsheet:

Cost per Minute, Minutes per Unit, Labor Used, Cost of Labor Used, Cost per oz of paper, Paper per unit, Paper Used, Cost of Paper Used, Quantity, Unit Selling, Price, Revenue, Profit

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2) Find the optimal solution, using the model and What's Best

You produce CD cabinets. You pay $2000 a month for rent, $2000 a month for insurance and $3000 a month for salaries. The cost of material for each cabinet is $10.00 and the company sells the cabinets for $30.00. If you sell 200 of these cabinets:

a) What are the variable costs?

b) What are the fixed costs for the month?

c) What is the revenue? ,

d) What is the profit or loss on the cabinets?

e) What is the breakeven quantity?

f) Draw a breakeven graph.

When drawing the graph use table and Excel as instructed.

#### Solution Preview

1. Illumina Inc. makes cardboard signs. The most popular signs they make are the Bronx, and Veterans, which require material and labor. They have a contract with Devon Publishing to make 1600 of the Bronx, which sell for $ .75 and require 20 ounces of paper and 5 minutes of labor. They plan on making 2000 of the Veterans, which sell for $1.10 and require 25 ounces of paper and 10 minutes of labor. Paper cost $.01 an ounce and labor ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment in excel file.