Suppose that you are the manager of a studio cafe, and you are planning to invest on a new camera and a coffee maker designed to increase the productivity of your employees and output (services) produced. Your analyst provided you the following information: Complete the table below.   Current Situation Projected Sales and Profit Incremental Revenues and Costs Total Revenue Php1,500,000 Php1,800,000           Variable Cost 575,000 425,000           Direct Fixed Costs 625,000 700,000           Indirect Fixed Costs 100,000 100,000           Profit       Should the new camera and coffee maker be purchased? Explain your answer based on the incremental analysis.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter16: Government Regulation
Section: Chapter Questions
Problem 8E
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Suppose that you are the manager of a studio cafe, and you are planning to invest on a new camera and a coffee maker designed to increase the productivity of your employees and output (services) produced. Your analyst provided you the following information:

  • Complete the table below.

 

Current Situation

Projected Sales and Profit

Incremental Revenues and Costs

Total Revenue

Php1,500,000

Php1,800,000

 

 

 

 

 

Variable Cost

575,000

425,000

 

       

Direct Fixed Costs

625,000

700,000

 

       

Indirect Fixed Costs

100,000

100,000

 

 

 

 

 

Profit

 

 

 

  • Should the new camera and coffee maker be purchased? Explain your answer based on the incremental analysis.
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