4. Several graduate students at ABC University formed a company called the ABCRiver Rafting Company to produce rubber rafts. The initial investment in plant andequipment is estimated to be $2,000. Labor and material cost is approximately $5per raft. (a) If the rafts can be sold at a price of $10 each, what volume of demandwould be necessary to break-even? (b) The students believe demand for theirproduct will far exceed the break-even point in (a). They are now contemplatinga larger initial investment of $10,000 for more-automated equipment that wouldreduce the variable cost of manufacture to $2 per raft, what is the break-even forthis new process? (c) Compare the process described in (a) with the processproposed in (b). For what volume of demand should each process be chosen?

Initial investment $2,000 Labor and material cost $5 per raft

Answered: Several graduate students at ABC…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Similar questions

The Best Wheels Bicycle Company produces bicycles indifferent styles for boys and girls, in heights of 26 inchesor 20 inches, and with 10 speeds, 3 speeds, or 1 speed.a. How many different kinds of bicycles does BestWheels make?b. Construct a modular bill of material for Best Wheels(one level). Assume that bike sales are equally splitbetween boys and girls, 26-inch bikes are preferredtwo-to-one to 20-inch bikes, and 3-speed bikes accountfor only 20% of sales. The remaining sales are dividedequally between 10-speed and 1-speed bikes.c. If bicycle sales are expected to reach 10,000 over theholiday shopping season, how many 26-inch bikesshould Best Wheels plan to produce? How many 10-speed bikes?
Jack Jones, the materials manager at Precision Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows the following inventory investment by category: raw materials, $3,129,500; work-in-process, $6,237,000; and finished goods, $2,686,500. This year’s cost of goods sold will be about $32.5 million. Assuming 52 business weeks per year, express total inventory asa. Weeks of supplyb. Inventory turns
There is no alternative place inside plant premises to store the increased salt consumption. Also the existing storage area cannot be modified and expanded further. Moreover, with the due expansion coming up in next 1 year, the salt consumption will Increase by approx. 50%. 1) Suggest the solution & Innovative way to better utilize the existing space and alternatives for storage area of Salt avoiding any stock-out situation to arise. Nor the plant capacity to be curtailed due to low stock of Salt. Suggestion can be made in terms of new Technology to be adopted and any other Out of Box thinking!
Eastman Publishing company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be P160,000. Variable production and materials costs are estimated to be P6 per book. The publisher plans to sell the text to college and university bookstores for P46 each. A. What is the break-even point? B. What profit or loss can be anticipated with a demand of 3,800 copies? C. With a demand of 3,800 copies, what is the minimum price per copy that the publisher must change to break-even? D. If the publisher believes that the price per copy coud be increase to P50.95 and not affected the anticipated demand of 3,800 copies, what action would you recommend? What profit or loss can be anticipated?
6.5. Patricia Zell, a dollmaker from Olney, Maryland, is interested in the mass marketing and production of a ceramic doll of her own design called Tiny Trisha. The initial investment required for plant and equipment is estimated at $25,000. Labor and material costs are approximately $10 per doll. If the dolls can be sold for $50 each, what volume of demand is necessary for the Tiny Trisha doll to break even?
The owner of Old-Fashioned Berry Pies, S. Simon, is contemplating adding a new line ofpies, which will require leasing new equipment for a monthly payment of $6,000. Variablecosts would be $2 per pie, and pies would retail for $7 each.a. How many pies must be sold in order to break even?b. What would the profit (loss) be if 1,000 pies are made and sold in a month?c. How many pies must be sold to realize a profit of $4,000?d. If 2,000 can be sold, and a profit target is $5,000, what price should be charged per pie?
(1) This DC value-adding activity allows it to receive full truckloads of one product and ship full truckloads of various products to customers. a. allocation b. mixing c. assembly d. kitting (2) As Q increases for EOQ, the cost per order: a. increases b. decreases c. stays the same d. cannot be determined
The Excellent DVD Company sells DVDs for $62 each. Manufacturing cost is $22.70 per DVD; marketing costs are $7.75 per DVD; and royalty payments are 15% of the selling price. The fixed cost of preparing the DVDs is $227 300. Capacity is 20 000 DVDs.a) Draw a detailed break-even chart. b) Compute the break-even point(i) in units;(ii) in dollars;(iii) as a percent of capacity.c) Determine the break-even point in units if fixed costs are increased by $3300 while manufacturing cost is reduced $1.65 per DVD.d) Determine the break-even point in units if the selling price is increased by 10% while fixed costs are increased by $2900.
The OEM company specializing in printed circuit board manufacturing has annual fixed expenses of P500,000,000 and variable costs of P1400 per board. How many circuit boards must they create and sell to break even if they charge P2,200 each circuit board? Do not put unit of measure thanks.
Given the following data for Albert’s fabricating production area:Fixed costs for one shift = $60,000Unit variable cost = $7Selling price = $12Number of machines = 6Number of working days in year = 340Processing time per unit = 40 minutes1. What is the maximum revenue with a single shift?2. What is the break-even volume with a two-shift operation?
1. Develop a level production plan for Covolo Diving Gear. What are the advantages and disadvantages of this plan? Could Covolo implement a pure chase plan, given the current capacity? Why? If sales continue to grow, what are the implications for production capacity at Covolo?
Billy B. decided four years ago to add high bush blueberries to his commercial vegetable farm near Whitesville. The first two years he did not harvest any berries. In the third year he had a very small crop but was not able to sell to the public. This year things look very good for the crop and he expects to produce 3000 pints. Billy has done a good job of keeping up with his costs, which include variable cost of $953.54, fixed cost of $863.92, and labor cost of $600. He believes the best method of marketing his crop is on a pick your own basis. Billy would like some help in determining what he should charge per pint for his berries. Answer the questions below to give Billy some direction on determining an asking price. 1. 2. 3. 4. 5. What factors should Billy consider in determining the price? What is the minimum price Billy can charge and break even on his crop? What price should he charge and why? What other methods can be used to determine price? If there is competition how will…

SEE MORE QUESTIONS

Recommended textbooks for you

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Business in Action

Operations Management

ISBN:

9780135198100

Author:

BOVEE

Publisher:

PEARSON CO

Purchasing and Supply Chain Management

Operations Management

ISBN:

9781285869681

Author:

Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:

Cengage Learning

Production and Operations Analysis, Seventh Editi…

Operations Management

ISBN:

9781478623069

Author:

Steven Nahmias, Tava Lennon Olsen

Publisher:

Waveland Press, Inc.

SEE MORE TEXTBOOKS