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2-50 CVP in a Moderu Mhnufichuring Environment A division of Hewlet-Packard Company changed Its production operations from one where a large labor force assembled electromic

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2-50 CVP in a Moderu Mhnufichuring Environment A division of Hewlet-Packard Company changed Its production operations from one where a large labor force assembled electromic components to an automated production facility daminated by computer-controlled robots. The change was necessary because of fierce competitive pressures. Improvements in quality, reliability, and flexibility of prodnction schedules mere necessary just to match the competition. As n result of the chamge, variable costs fell, and fixed costs increased, as shown in the following aggumed budgets: The expected volume is 600,000 units per month, with each unit selling for $3.10. The capacity is 800,000 units. 1. Compute the budgeted profit at the expected volume of 600,000 units under both the old and the new prochuction environments. 2. Compute the budgeted break-even point under both the old and the new production environmenta. 3. Discuss the effect on profits if volume falls to 500,000 unite under both the old and the new production environments. 4. Discuss the effect on profits if volume increases to 700,000 units under both the old and the new production environments. 5. Comment on the riakiness of the new operation versus the old operation

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