Question 1: Use a graphical procedure

Question 2: Use an algebraic procedure

At break-even-point: Total revenue=Total cost
<=> 1700Q=10000000+1300Q
<=> Q= 25000 watches
Total cost= Total revenue=$42500000

Question3: The mathematical model

Decision variable:
Q= Number of Watches to produce
Costs:
Fixed Cost=$10 million (if Q>0)
Variable cost=$1300Q
Total cost=
0, if Q=0
$10 million+$1300Q, if Q>0
 Profit:
Profit=Total revenue-Total cost
Profit=0, if Q=0
Profit=$1700Q-($10 million+$1300Q, if Q>0)

Question 4 : Data
Unit Revenue $1,700 Total Revenue
Fixed Cost $10,000,000 Total Fixed Cost
Variable Cost $1,300 Total variable Cost
Sale Forecasts 30000 Profit (Loss)

Production Quantity 30000 Break-Even Point

Question 5:
Unit revenue 1700 Total revenue
Fixed cost 10000000 Total fixed cost
Variable cost 1300 Total variable cost
Sale Forcasts 20000 Profit(loss)

Production quantity 0 Break even point

 Results
Total Revenue $51,000,000
Total Fixed Cost $10,000,000
Total variable Cost $39,000,000
Profit (Loss) $2,000,000

Break-Even Point $25,000

Total revenue
Total fixed cost
Total variable cost
Profit(loss)

Break even point 25000

a,b,c,f
Buy Data
Unit revenue $2,000 Total revenue
Fixed cost $5,000,000 Total fixed cost
Variable cost $1,250 Total variable cost
Sale forecast 30000 Profit(loss)

Production quantity 30000 Break even point

Make
Unit revenue $2,000 Total revenue
Fixed cost $10,000,000 Total fixed cost
Variable cost $1,000 Total variable cost
Sale forecast 30000 Profit(loss)

Production quantity 30000 Break even point

d
e. Buy At break-even-point: Total revenue=Total cost
<=> 2000Q=5000000+1250Q
<=> Q= 6666.666667

Make At break-even-point: Total revenue=Total cost

<=> 2000Q=10000000+1000Q
<=> Q=10000
Results
$60,000,000
$5,000,000 Conclude If producing less than 6666 products
$37,500,000 If producing over 6666 and less than 10000 products
$17,500,000 If producing more than 10000 products

6666.66666667

$60,000,000
$10,000,000
$30,000,000
$20,000,000

10000
Do not make or buy
Buy
make