Farm Dairy has a process that results in 1,000 liters of milk that can be sold for $2 per liter and cost per liter is $1 per liter. An alternative would be to process milk further at an additional cost of $2 and then sell it as cream for $5 per liter. Should management sell milk now or should cream be processed further and then sold? Select one: a. Sell now; the company will be better off by $3,000. O b. Process further; the company will be better off by $3,000. c. Sell now; the company will be better off by $2,000. O d. Process further; the company will be better off by $2,000

Farm Dairy has a process that results in 1,000 liters of milk that can be sold for $2 per liter and cost per liter is $1 per liter. An alternative would be to process milk further at an additional cost of $2 and then sell it as cream for $5 per liter. Should management sell milk now or should cream be processed further and then sold? Select one: a. Sell now; the company will be better off by $3,000. O b. Process further; the company will be better off by $3,000. c. Sell now; the company will be better off by $2,000. O d. Process further; the company will be better off by $2,000

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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McKenzie Company can sell 20,000 pounds of product for $10 per pound. The company can also process this product further and sell it for $17 per pound at a cost of $110,000. Should McKenzie sell product now or process it further and then sell it? What is the effect of the action? Group of answer choices Sell now, the company will be better off by $90,000. Process further, the company will be better off by $30,000. Sell now, the company will be better off by $140,000. Process further, the company will be better off by $140,000. Sell now, the company will be better off by $30,000.
Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand is $50.00. Her best guess is that she can sell 300 cups per week at $0.50 per cup. The variable cost of producing a cup of lemonade is $0.20. a. Given her other assumptions, what level of sales volume will enable Julie to break even? b. Given her other assumptions, discuss how a change in sales volume affects profit. c. Given her other assumptions, discuss how a change in sales volume and variable cost jointly affect profit.
A company has a process that results in 980 kilograms of Product X that can be sold for $9 per kilogram. An alternative would be to process Product X further at a cost of $1960 and then sell it for $16 per kilogram. Should management sell Product X now or should Product X be processed further and then sold? Process further; the company will be better off by $4900. Sell now; the company will be better off by $4900. Process further; the company will be better off by $6860. Sell now; the company will be better off by $8820.
Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Mesa believes that it can charge $30 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $31. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (a) Compute the target cost for the Slim Slicer. Target cost $
Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its online website. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (b) When is target costing particularly helpful in deciding whether to produce a given product?
Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned incroase in production. The PJX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derok the following information. What is the IRR of the PJX5? #2 a. The PJX5 will cost $1.66 million fully instaled and has a 10 year life. It wll be depreciated to a book value of $257,124.00 and sold for that amount in year 10. b. The Engineering Department spent $48,616.00 researching the various juicers. a. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $18,897.00. d. The PJXS will reduce operating costs by $496,802.00 per yoar. 0. CSD's marginal tax rate is 31.00%. 1. CSD is 58.00% equity-financed. 9. CSD» 12.00-yoar, semi-annual pay, 6.63% coupon bond sells for $1,038.00. h. CSD's stock currently has a market value of $23.50 and Mr. Bensen believes the market estimates that dividends will grow at…
Night Shades Inc. (NSI) manufactures biotech sunglasses. These sunglasses sell for $150 each, and cost $70 each to produce. Night Shades Inc. has fixed costs of $100,000. Calculate Night Shades’ Breakeven point. how much profit (loss) will Night Shades have if it sells 500 sunglasses? 4,000 sunglasses? Night Shades’ manager expects an operating profit of $200,000. How many sunglasses must be sold to attain this profit?
Ortega Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a computer hard drive is $54. Ortega would like a profit of $14 per drive. What target cost Ortega should set to accomplish this objective? Target cost $ per hard drive
A truck manufacturer can produce one more truck if it hires another employee for $40,000. It can also produce one more truck if it buys $50,000 worth of machinery. A truck sells on the market for $60,000. The truck manufacturer should a. Hire employees until the cost of the next employee equals the cost of buying machinery to produce another truck b. Buy machinery until the cost of buying machinery to produce another car equals the cost of hiring another employee С. Sell machinery and lay off employees d. Lay off employees and buy machinery e. None of the above
Night Shades Inc. (NSI) manufactures biotech sunglasses. These sunglasses sell for $150 each, and cost $70 each to produce. Night Shades Inc. has fixed costs of $100,000. a. Calculate Night Shades’ Breakeven point. b. how much profit (loss) will Night Shades have if it sells 500 sunglasses? 4,000 sunglasses? c. Night Shades’ manager expects an operating profit of $200,000. How many sunglasses must be sold to attain this profit?