Follow the instructions. Typewritten for an upvote. No upvote for handwritten. PLEASE SKIP IF YOU HAVE ALREADY DONE THIS. Thank you Vicki Smith, Penny Miller, and Darryl Davis are students at State University. In the summer, theyoften go rafting with other students down the Ocobee River in the nearby Blue Ridge Mountain foothills.The river has a number of minor rapids but is not generally dangerous. The students' rafts basicallyconsist of large rubber tubes, sometimes joined together with a ski rope. They have noticed that anumber of students who come to the river don't have rubber rafts and often ask to borrow theirs, whichcan be very annoying. In discussing this nuisance, it occurred to Vicki, Penny, and Darryl that the problemmight provide an opportunity to make some extra money. They considered starting a new enterprise, theOcobee River Rafting Company, to sell rubber rafts on the river. They determined that their initialinvestment would be about $3,000 to rent a small parcel of land next to the river on which to make andsell the rafts; purchase a tent to operate out of, and buy some small equipment such as air pumps and arope cutter. They estimated that the labor and material cost per raft will be about $12, including thepurchase and shipping costs for the rubber tubes and rope. They plan to sell the rafts for $20 a piece,which they think is about the maximum price students will pay for a preassembled raft.Soon after they determined these cost estimates, the newly formed company learned aboutanother rafting company in North Carolina that was doing essentially what they planned to do. Vicki gotin touch with one of the operators of that company, and he told her the company would be willing tosupply rafts to the Ocobee River Rafting Company for an initial fixed fee of $9,000 plus $8 per raft,including shipping. (The Ocobee River Rafting Company would still have to rent the parcel of riversideland and tent for $1,000.) The rafts would already be inflated and assembled. This alternative appealedto Vicki, Penny, and Darryl because it would reduce the amount of time they would have to workpumping up the tubes and putting the rafts together, and it would increase time for their schoolwork. |Although the students prefer the alternative of purchasing the rafts from the North Carolinacompany, they are concerned about the large initial cost and worried about whether they will losemoney. Of course, Vicki, Penny, and Darryl realize that their profit, if any, will be determined by howmany rafts they sell. As such, they believe that they first need to determine how many rafts they mustsell with each alternative in order to make a profit and which alternative would be best given differentlevels of demand. Furthermore, Penny has conducted a brief sample survey of people at the river andestimates that the demand for rafts for the summer will be around 1,000 rafts.REQUIRED: Perform analysis for the Ocobee River Rafting Company to determine which alternativewould be best for different levels of demand. Indicate which alternative should be selected if thedemand is approximately 1,000 rafts and how much profit the company would make.

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Break-even analysis is one of the methods that are commonly and widely used in manufacturing…

REQUIRED: Perform analysis for the Ocobee River Rafting Company to determine which alternative would be best for different levels of demand. Indicate which alternative should be selected if the demand is approximately 1,000 rafts and how much profit the company would make.