Gary’s Seasoning wants to increase its capacity by adding more blending and packagingmachines. Two vendors have presented proposals. Vendor A’s equipment costs $11,500 and the variable cost per unit is $2.00. Vendor B’s equipment costs $13,500 and the variable cost per unit is $1.75. Selling price for each seasoning packet for $4.00.a. What is the break-even point for each proposal?b. If the expected volume is 7,500 packages, which vendor should be chosen? (Show all calculations to earn full credit)
Gary’s Seasoning wants to increase its capacity by adding more blending and packagingmachines. Two vendors have presented proposals. Vendor A’s equipment costs $11,500 and the variable cost per unit is $2.00. Vendor B’s equipment costs $13,500 and the variable cost per unit is $1.75. Selling price for each seasoning packet for $4.00.a. What is the break-even point for each proposal?b. If the expected volume is 7,500 packages, which vendor should be chosen? (Show all calculations to earn full credit)
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
Related questions
Question
Gary’s Seasoning wants to increase its capacity by adding more blending and packaging
machines. Two vendors have presented proposals. Vendor A’s equipment costs $11,500 and the
variable cost per unit is $2.00. Vendor B’s equipment costs $13,500 and the variable cost per unit
is $1.75. Selling price for each seasoning packet for $4.00.
a. What is the break-even point for each proposal?
b. If the expected volume is 7,500 packages, which vendor should be chosen? (Show all
calculations to earn full credit)
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