Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettu
Posted: Sun Jul 03, 2022 5:23 pm
Zan Azlett and Angela Zesiger have joined forces tostart A&Z Lettuce Products, a processor of packagedshredded lettuce for institutional use. Zan has years of foodprocessing experience, and Angela has extensive commercialfood preparation experience. The process will consist of openingcrates of lettuce and then sorting, washing, slicing,preserving, and finally packaging the preparedlettuce. Together, with help from vendors, they thinkthey can adequately estimate demand, fixed costs,revenues, and variable cost per bag of lettuce. They think alargely manual process will have monthly fixed costsof $37,500 and variable costs of $1.60 per bag.A more mechanized process will have fixed costsof $75,000 per month with variable costsof $1.00 per bag. They expect to sell the shreddedlettuce for $2.75 per bag.
a) The break-even quantity in units for the manualprocess _____ bags (round your response to the nearestwhole number).
b) The revenue for the manual process at the break-evenquantity = _____ (round your response to the nearestwhole number).
c) The break-even quantity in units for the mechanizedprocess = ______ bags (round your response to thenearest whole number).
d) The revenue for the mechanized process atthe break-even quantity = _______ (round yourresponse to the nearest whole number).
e) For monthly sales of 55,000 bags, for the optionwith manual processing, A&Z Lettuce Products will have aprofit of ________ (round your response to the nearest wholenumber and include a minus sign if the profitis negative).
f) For monthly sales of 55,000 bags, for the optionwith mechanized processing, A&Z Lettuce Products willhave a profit of ______ (round your response to the nearestwhole number and include a minus sign if the profitis negative).
g) The quantity at which Zan and Angela are going to beindifferent between the manual and mechanized process =_______ bags (round your response to the nearestwhole number).
h) If the demand exceeds the point of indifference, thenZan and Angela should prefer the option with ( manualor mechanized ) processing.
If the demand stays below the point of indifference, thenZan and Angela should prefer the option with ( manual ormechanized ) processing.
a) The break-even quantity in units for the manualprocess _____ bags (round your response to the nearestwhole number).
b) The revenue for the manual process at the break-evenquantity = _____ (round your response to the nearestwhole number).
c) The break-even quantity in units for the mechanizedprocess = ______ bags (round your response to thenearest whole number).
d) The revenue for the mechanized process atthe break-even quantity = _______ (round yourresponse to the nearest whole number).
e) For monthly sales of 55,000 bags, for the optionwith manual processing, A&Z Lettuce Products will have aprofit of ________ (round your response to the nearest wholenumber and include a minus sign if the profitis negative).
f) For monthly sales of 55,000 bags, for the optionwith mechanized processing, A&Z Lettuce Products willhave a profit of ______ (round your response to the nearestwhole number and include a minus sign if the profitis negative).
g) The quantity at which Zan and Angela are going to beindifferent between the manual and mechanized process =_______ bags (round your response to the nearestwhole number).
h) If the demand exceeds the point of indifference, thenZan and Angela should prefer the option with ( manualor mechanized ) processing.
If the demand stays below the point of indifference, thenZan and Angela should prefer the option with ( manual ormechanized ) processing.