Final answer:
The base-case profit for the wearable electronic device, considering a fixed cost of $300,000, a variable cost of $205 per unit, and demand of 4,000 units, would be $80,000.
Step-by-step explanation:
To develop a what-if spreadsheet model and compute the profit for a wearable electronic device in different scenarios, we need to calculate the base-case, worst-case, and best-case profits. These calculations will take into account the fixed costs, variable costs, and expected sales price per unit, along with estimated demand.
Firstly, the fixed cost is given as $300,000. For the base-case scenario, we'll use the most likely variable cost of $205 per unit and demand of 4,000 units. The sales price per unit is $300. Profit is calculated as follows:
Profit = (Sales Price per Unit * Units Sold) - (Variable Cost per Unit * Units Sold) - Fixed Costs
Base-case Profit = ($300 * 4,000) - ($205 * 4,000) - $300,000
Substitute the numbers:
Base-case Profit = $1,200,000 - $820,000 - $300,000
Base-case Profit = $80,000
Similarly, for the worst-case scenario, we'll use the highest variable cost of $245 per unit and the lowest expected demand of 0 units. For the best-case scenario, we'll use the lowest variable cost of $165 per unit and the highest expected demand of 20,000 units. You would then plug these alternative values into the same profit formula to get the respective profits for each scenario.