For h the options is either manual or mechanized as shown. Please answer all the
ID: 426570 • Letter: F
Question
For h the options is either manual or mechanized as shown.
Please answer all the boxes and label the answer as A) B) C) D) E) F) G) H)
Make it clear you can type final answer Zan Azlett and Angela Zesiger have joined forces to start A&Z; Lettuce Products, a processor of packaged shredded lettuce for institutional use. Zan has years of food processing experience, and Angela has extensive commercial food preparasion experience. The process will consist of opening crates of lettuce and then sorting. washing, elicing, preserving, and finally packaging the prepared lettuce. Together, with help from vendors, they think they can adequately estimate demand, fixed costs revenues, and variable cost per bag of lettuce. They think a largely manual process wil have monthly fixed costs of $40,000 and variable costs of $2.00 per bag. A more mechanized process wil have fixed costs of $80,000 per month with variable costs of $1.25 per bag. They expect to sell the shredded lettuce for $2.75 per bag. a) The break-even quantity in unts for the manual process bags (round your response to the noarost whole number) b) The revenue for the manual process at the break even quantity S ?(round your responsS to the nearest whole number c) The treak-even quantity in units for the mechanized processbags (round your response to the nearest whole number). d) The revenue for the mechanized process at the break-even quantity(round your response to the nearest whole number) e For monthly sales of 60 000 bags, for the op on with manual pr essing A&Z; Let uce Products wil have a p otos» number and include a minus sign if the proft is negative) dyr os o so to the nearest ole For monthly sales of 60,000 bags, for the option with mechanized processing, Asz Lettuce Products will have a profit of s(round your response to the nearest whole number and include a minus sign if the profit is negative). 9) The quantity at which Zan and Angela are going to be indifferent between the manual and mechanized process bags (round your response to the nearest h) If the demand exceeds the point of indifference, then Zan and Angela should prefer the option with Enter your answer in each of the answer boxes.
Explanation / Answer
A) The break-even quantity for manual process = Fixed cost / (selling price - variable cost) = 40000/(2.75-2) = 53,333 bags
B) Revenue for manual process at breakeven = 53333*2.75 = $ 146,666
C) The break-even quantity for mechanical process = Fixed cost / (selling price - variable cost) = 80000/(2.75-1.25) = 53,333 bags
D) Revenue for mechanical process at breakeven = 53333*2.75 = $ 146,666
E) For monthly sales of 60000 bags, for manual processing, profit = Sales * (Selling price - Variable cost) - Fixed cost = 60000*(2.75-2) - 40000 = $ 5,000
F) For monthly sales of 60000 bags, for mechanized processing, profit = Sales * (Selling price - Variable cost) - Fixed cost = 60000*(2.75-1.25) - 80000 = $ 10,000
G) The quantity of indifference between manual and mechanical process = (Fixed cost of Mechanical - Fixed cost of Manual) / (Variable cost of Manual - Variable cost of Mechanical)
= (80000-40000)/(2-1.25)
= 53,333 bags
H) If the demand exceeds the point of indifference, then Zen and Angela should prefer option with Mechanical processing.
If the demand stays below the point of indifference, then Zen and Angela should prefer option with Manual processing.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.