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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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Previous Question Next Question

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?