Question
In excel sheet please Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce for institutional
In excel sheet please
Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce for institutional use. Zan has years of food-processing experience, and Angela has extensive commercial food-preparation experience. The process will consist of opening crates of lettuce and then sorting, washing, slicing, preserving, and finally packaging the prepared lettuce. Together, with help from vendors, they think they can adequately estimate demand, fixed costs, revenues, and variable cost per 5-pound bag of lettuce. They think a largely manual process will have monthly fixed costs of $37,500 and variable costs of $1.75 per bag. A more mechanized process will have fixed costs of $75,000 per month with variable costs of $1.25 per 5-pound bag. They expect to sell the shredded lettuce for $2.50 per 5-pound bag.
a. What is the break-even quantity for the manual process?
b. What is the revenue at the break-even quantity for the manual process?
c. What is the break-even quantity for the mechanized process?
d. What is the revenue at the break-even quantity for the mechanized process?
e. What is the monthly profit or loss of the manual process if they expect to sell 60,000 bags of lettuce per month?
f. What is the monthly profit or loss of the mechanized process if they expect to sell 60,000 bags of lettuce per month?
g. Challenging question. At what quantity would Zan and Angela be indifferent to the process selected?
h. Two challenging sub-questions: (i) Over what range of demand would the manual process be preferred over the mechanized process? (ii) Over what range of demand would the mechanized process be preferred over the manual process? the mechanized process be preferred over the manual process?
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