Established in $2022,$ Flex Star provides premium packaging soluons ulizing cung$-$edge equipment, advanced processes, and rigorous quality control measures. Their vercally integrated manufacturing environment offers comprehensive engineering services, prepress and graphics capabilies, premium blown film producon, high$-$resoluon prinng, solventless laminaon, precise sling, and state$-$of$-$the$-$art conversion equipment. Alex Korosky is the CEO of Flex Star; he convened a management meeng to discuss the financial performance of Flex Star along with the expansion plan that he has in mind. Alex led the meeng with his execuve team and ensured the pressing important topics were discussed. The sales manager started the meeng with credit risk management. According to the sales manager, Flex Star has an excellent credit$-$establishing process, a structured system for tracking credit periods which need to be established. Each credit applicaon process starts with the sales manager requesng a credit applicaon to be filled out by the customer, which the sales manager then approves for the credit limit request. The customer$$s applicaon is then forwarded to the accounng team so it can set up the customer's account. At first glance, Alex believes this to be a good process but is wondering if improvements can be made and how progress might be measured by the execuve team. Being a manufacturing plant, Flex Star is quite concerned about direct labour costs, as they make up a major part of the cost of inventory. The recent union negoaon has caught Alex$$s atenon, and aer consulng with the HR manager, he has come to the realizaon that direct labour rate for his plant workers, along with the supervisor salaries, will soon be increased by $10\%.$ As many of the firm$$s sales contracts will be coming due in two months $($with the rate increases kicking in at about the same me$),$ it is important for the execuve team to come up with a strategic plan to manage this increase. As the labour cost conversaon connued, the bill of the material topic was also brought up$.$ Alex showed the execuve team Flex Star$$s typical bill$-$of$-$materials statement and outwardly wondered if there is any area, they should focus on to improve its cost. Packaging is a compeve industry, so the race of quality and pricing has always been crical in contribung to Flex Star$$s success. Below is a BOL to produce $1000$ bags, with margin of $2024$ reduced quite significantly due to unchanged pricing, an analysis needs to be done in order to help Flex Star achieve a $20\%$ margin future going forward, assuming cost of $2024$ will stay constant unl the end of fiscal year $2024.$ Component Qty consume $2023$ Total Value consumed $2023$ Qty consume $2024$ Total Value consumed $2024$ Testing $5$ $ $406$ $ $50$ Resins $150$ $ $1,200168$ $ $1,512$ Pallet cover $207$ $ $1,242232$ $ $1,391$ Cores $10$ $ $5011$ $ $56$ Manufacturing Overhead $510$ $ $4,590571$ $ $5,712$ Labour Cost $185$ $ $1,850207$ $ $2,279$ Flex Star's bag$-$making division specializes in manufacturing plasc components for the small pet food market. These components are produced in high$-$volume runs, with equipment oen operang around the clock for consecuve days to maintain producon consistency. Addionally, the division fulfills low$-$volume orders with unique specificaons. One of the machines in this department requires replacement. Currently valued at CAD $$13,000,$ the machine must be replaced due to upcoming safety regulaons. This machine produces Flat botom bags of which incur fixed costs, including depreciaon, the relevant details of which are as follows: Flat botom bag $($A$)$ Sales CAD $$100000$ Cost of sales Variable costs $82000$ Fixed costs $1500097000$ Annual profit $$3000$ Note that: All the fixed costs $($including depreciation$)$ are directly related to the production of Flat bottom bag. Projecons indicate that current revenue and costs will increase $10\%$ each year for the next five years, aligning with the expected lifespan of the new machine under review. Introducing this new machine would reduce variable costs by CAD $$8,000$ for A$.$ Acquision and installaon costs for the new machine are esmated at CAD $$100,000,$ with a $$10,000$ residual value aer five years. Company policy dictates straight$-$line depreciaon for such machinery, with a cost of capital set at $10$ percent. Alex wanted to invest in this machine but was not certain about the best approach to evaluate this investment. As a proacve CEO, Alex has been researching the plasc industry and came across significant informaon. Notably, in $2021,$ the Canadian government unveiled an ambious iniave aimed at eliminang Canada's plasc waste enrely by $2030($PMO$,2021).$ This iniave, known as Zero Plasc Waste $2030($ZPW$2030),$ underscores the escalang global concerns surrounding the environmental repercussions associated with plasc producon, ulizaon, and disposal. The primary objecve of the ZPW$2030$ policy is not