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Cottage Industries expects to sell 500 baskets a month. The business has the opportunity to rent a basket-making machine. Doing so, would increase the total

Cottage Industries expects 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 $3.000. Using the machine would reduce the labour time to half an hour per basket.
The basket makers would still be paid 10$ an hour.
a) How much profit would the business make each month from selling baskets?
- Without the machine?
- With the machine?
b) What is the BEP if the machine is rented?
- Prepare a revenue and cost schedule.
c) What do you notice about the figures that you calculate?

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