Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Accustart Herbal Supplements purchases, in bulk, a variety of dietary supplements that the company bottles, packages, and ships to health-food stores and drugstores around the
Accustart Herbal Supplements purchases, in bulk, a variety of dietary supplements that the company bottles, packages, and ships to health-food stores and drugstores around the country. The company has a good reputation, and its products are in high demand. Last year the company purchased mechanical packaging equipment for $312,500 and reduced its shipping department by two people, eliminating an annual salary expense of $124,230. When it works, the equipment packages product 30 percent faster than the previous manual system. Unfortunately, the equipment has broken down on many occasions for up to four hours. Normally (when the packaging equipment is working), the company packages 2,200 bottles per hour, and the average contribution margin per bottle is $0.60. The general manager of operations has suggested that the company rehire the two packaging workers as backup for the new packaging system. The company president doesn't think this is a good idea since the workers will only be working around 10 hour per week when the equipment is down and sitting around doing nothing for 30 hours per week! Calculate the incremental profit of hiring back the two workers. (Round answer to O decimal places, e.g. 125.) Incremental of hiring back the two workers $ per year
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started