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Boon Lay Industries make baskets. The fixed cost of operating the workshop for a month total $500. Each basket requires material that cost $2, and

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Boon Lay Industries make baskets. The fixed cost of operating the workshop for a month total $500. Each basket requires material that cost $2, and each takes one hour to make. The business pays the basket makers $10 an hour. The basket makers are all on contract such that if they do not work for any reason, they are not paid. The baskets are sold to a wholesales for $14 each. What is the break-even point for basket making for the business? (250 basket/month) Boon Lay Industries expect to sell 500 baskets a month. The business has the opportunity to rent a basket-making machine. Doing so would increase the total fixed cost of operating the workshop for a month to $3000. Using the machine would reduce the labour time to half an hour per basket. The basket maker would still to paid $10 an hour. a) Assuming that the basket-making machine is NOT RENTED, how much profit would the business make each month from selling basket? ($500/month) b) Assuming that the basket-making machine is RENTED, how much profit would the business make each month from selling basket? ($500/month) c) What is the break-even point if the machine is RENTED? (429 basket/month) d) What do you notice about the figures that you calculated? (Hint: Tabulate a table - With Machine & Without Machine AGAINST profit, BEP, Contribution)

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