Samoset Fans, Inc. manufacturers its fan blades in-house. Theowner, Betty Dice, doesn't outsource any fan parts except fanmotors — all other fans parts are made in-house. Their currentprocess and its equipment are getting old. Maintenance and repaircosts are increasing at nine percent per year. She and her companyteam are evaluating two new processes. The first process has anannual fixed cost of $700,000 and a variable cost of $19 per fanblade. The second process is more automated and requires an annualfixed cost of $1,000,000 and a variable cost of $13 per fan blade.The internal transfer cost of a fan blade is $23, and this helpsthe firm determine the total manufactured cost of a completed fan.Use the Excel template Break-Even in MindTap toanswer the following questions:
What is the break-even quantity between these two processes?Round your answer to the nearest whole number.
fan blades
If predicted demand for next year is 110,000 blades, whatprocess do you recommend? Round your answers to the nearestdollar.
Total cost of Process A: $
Total cost of Process B: $
So, -Select-Process AProcess BItem 4 isrecommended.
What is the cost savings? Round your answer to the nearestdollar.
$
What volume of demand does Samoset Fans, Inc need to make aninternal profit on fan blades of $130,000, assuming they installedthe process you recommend in part (b)? Round your answer to thenearest whole number.
fan blade
Samoset Fans, Inc. manufacturers its fan blades in-house. The owner, Betty Dice, doesn't outsource any fan parts except
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