Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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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
112000112000
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.)Expert Solution
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