shreds, and distributes a variety of salad mixes in 2-pound bags. Doug Voss, Operations VP, is considering a new Hi-Speed shredder to replace the old machine, referred to in the shop as “Clunker.” Hi-Speed will have a fixed cost of $85,000 per month and a variable cost of $1.25 per bag. Clunker has a fixed cost of only $44,000 per month, but a variable cost of $1.75. Selling price is $2.50 per bag. What is the crossover point in units (point of indifference) for the processes? What is the monthly profit or loss if the company changes to the Hi-Speed shredder and sells 60,000 bags per month? What is the monthly profit or loss if the company stays

shreds, and distributes a variety of salad mixes in 2-pound bags. Doug Voss, Operations VP, is considering a new Hi-Speed shredder to replace the old machine, referred to in the shop as “Clunker.” Hi-Speed will have a fixed cost of $85,000 per month and a variable cost of $1.25 per bag. Clunker has a fixed cost of only $44,000 per month, but a variable cost of $1.75. Selling price is $2.50 per bag. What is the crossover point in units (point of indifference) for the processes? What is the monthly profit or loss if the company changes to the Hi-Speed shredder and sells 60,000 bags per month? What is the monthly profit or loss if the company stays

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EB: Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the...

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Gardens, Inc., prewashes, shreds, and distributes a variety of salad mixes in 2-pound bags. Doug Voss, Operations VP, is considering a new Hi-Speed shredder to replace the old machine, referred to in the shop as "Clunker." Hi-Speed will have a fixed cost of $85,000 per month and a variable cost of $1.25 per bag. Clunker has a fixed cost of only $44,000 per month, but a variable cost of $1.75. Selling price is $2.50 per bag. a) What is the crossover point in units (point of indifference) for the processes? b) What is the monthly cost if the company stays with Clunker and sells 60,000 bags per month? c) What is the monthly cost if the company changes to the Hi-Speed shredder and sells 60,000 bags per month? d) What is the monthly profit if the company stays with Clunker and sells 60,000 bags per month? Clunker Hi-Speed Fixed cost per month Variable cost
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