Question
I did everything by hand and in excel, but I just want to make sure I am doing everything right. TIA! Number 1 Winston Manufacturing
I did everything by hand and in excel, but I just want to make sure I am doing everything right. TIA!
Number 1
Winston Manufacturing is trying to decide whether to refurbish old equipment, upgrade the old equipment or purchase new equipment. The cost to refurbish is $55,000, to upgrade is $95,000, or to purchase new equipment is $175,000.The product sells for $14.50 but the variable costs are dependent on the type on changes that have been made. Using refurbished equipment results in variable cost per unit of $6.85, upgraded equipment results in variable cost per unit of $5.15, and using new equipment results in variable cost per unit of $4.25. The expected sales of the product is estimated to be between 30,000 and 40,000 units.
- a)How many units need to be sold to break-even if the equipment is refurbished?
- b)How many units need to be sold to break-even if the equipment is upgraded?
- c)How many units need to be sold to break-even if the equipment is purchased new?
- d)What is the profit/loss using refurbished equipment if 40,000 units are sold?
- e)What is the profit/loss using upgraded equipment if 35,000 units are sold?
- f)What is the profit/loss using new equipment if 30,000 units are sold?
- g)Which option would you recommend to the manufacturer (you are not using parts d, e, and f for
- this answer - if the volume was between 30,000 and 40,000 (same volume for all processes) - which option would produce the greatest amount of profit) ?
Number 2
The Blankets 'R Us Company sells hand-made blankets. The company is planning to print a catalog and send them out in a direct mail campaign. The cost of printing the catalog is $10,968.75 for setting up the presses plus $1.75 to print and mail each catalog. Each catalog that is mailed out generates $8.50 in revenue. (Hint: Use Goal Seek function)
- a)How many catalogs should be mailed out to break-even?
- b)How much revenue is generated at the break-even point?
- c)What is the profit if they mail out 2000 catalogs?
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