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 ​$87,000 per month and a variable cost of ​$1.20 per bag. Clunker has a fixed cost of only ​$31,000 per​ month, but a variable cost of ​$1.70. Selling price is ​$2.40 per bag. Part 2 ​a) What is the crossover point in units​ (point of​ indifference) for the​ processes? The crossover point is 112000 units. ​(Round your response to the nearest whole​ number.) Part 3 ​b) What is the monthly profit or loss if the company changes to the​ Hi-Speed shredder and sells 90,000 bags per​ month?   The monthly profit or loss if the company changes to the​ Hi-Speed shredder and sells 90,000 bags per month is ​$enter your response here. ​(Round your response to the nearest dollar and include a minus sign if​ necessary.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 5E
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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 ​$87,000 per month and a variable cost of ​$1.20 per bag. Clunker has a fixed cost of only
​$31,000 per​ month, but a variable cost of ​$1.70. Selling price is ​$2.40 per bag.
Part 2
​a) What is the crossover point in units​ (point of​ indifference) for the​ processes?
The crossover point is
112000 units. ​(Round your response to the nearest whole​ number.)
Part 3
​b) What is the monthly profit or loss if the company changes to the​ Hi-Speed shredder and sells
90,000 bags per​ month?
 
The monthly profit or loss if the company changes to the​ Hi-Speed shredder and sells 90,000 bags per month is
​$enter your response here.
​(Round your response to the nearest dollar and include a minus sign if​ necessary.)
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