? California? Gardens, Inc.,? prewashes, shreds, and distributes a variety of sa
ID: 338194 • Letter: #
Question
? California? Gardens, Inc.,? prewashes, shreds, and distributes a variety of salad mixes in? 2-pound bags. Doug? Voss, Operations? VP, is considering a new? Hi-Speed shredder to replace the old? machine, referred to in the shop as? "Clunker." Hi-Speed will have a fixed cost of
$84,000
per month and a variable cost of
?$1.55
per bag. Clunker has a fixed cost of only
?$31,000
per? month, but a variable cost of
?$1.95
Selling price is
?$3.10
per bag.
?a) What is the crossover point in units? (point of? indifference) for the? processes?
The crossover point is
units. ?(Round your response to the nearest whole? number.)
?b) What is the monthly profit or loss if the company changes to the? Hi-Speed shredder and sells
110,000 bags per? month?
The monthly profit or loss if the company changes to the? Hi-Speed shredder and sells
110,000
bags per month is
?$.
?(Round your response to the nearest dollar and include a minus sign if? necessary.)
?c) What is the monthly profit or loss if the company stays with Clunker and sells
110,000 bags per? month?
The monthly profit or loss if the company stays with Clunker and sells
110,000 bags per month is
?$.
?(Round your response to the nearest dollar and include a minus sign if? necessary.)
Explanation / Answer
? California? Gardens, Inc.,? prewashes, shreds, and distributes a variety of salad mixes in? 2-pound bags. Doug? Voss, Operations? VP, is considering a new? Hi-Speed shredder to replace the old? machine, referred to in the shop as? "Clunker." Hi-Speed will have a fixed cost of
$84,000
per month and a variable cost of
?$1.55
per bag. Clunker has a fixed cost of only
?$31,000
per? month, but a variable cost of
?$1.95
Selling price is
?$3.10
per bag.
?a) What is the crossover point in units? (point of? indifference) for the? processes?
The crossover point is
units. ?(Round your response to the nearest whole? number.)
?b) What is the monthly profit or loss if the company changes to the? Hi-Speed shredder and sells
110,000 bags per? month?
The monthly profit or loss if the company changes to the? Hi-Speed shredder and sells
110,000
bags per month is
?$.
?(Round your response to the nearest dollar and include a minus sign if? necessary.)
?c) What is the monthly profit or loss if the company stays with Clunker and sells
110,000 bags per? month?
The monthly profit or loss if the company stays with Clunker and sells
110,000 bags per month is
?$.
?(Round your response to the nearest dollar and include a minus sign if? necessary.)
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