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Jumbo Jim produces creative flavors of budget-friendly scotch. The company is eager to reveal its new flavor, grape scotch. The bottles will sell for $15
Jumbo Jim produces creative flavors of budget-friendly scotch. The company is eager to reveal its new flavor, grape scotch. The bottles will sell for $15 each. Enough capacity exists in the company's plant to produce 8,000 bottles each month. Variable costs to manufacture and sell one of the bottles of grape scotch would be $7.50. Fixed costs associated with the production would total $24,000 per month. Jumbo Jim's marketing department predicts that demand for the new flavor will exceed the factory's current capacity. The marketing department has already found a second location to expand production up to another 15,000 bottles. This space can be rented for $25,000 per month. Variable costs in the rented facility would total $8.50 per unit due to somewhat less efficient operations than in the company's current facility. QUESTION 1: What is the maximum profit that the company's current factory can produce? A. $36,000 B. $144,500 C. $60,000 D. $24,000 E. $108,500 QUESTION 2: How many bottles of the new flavor must be sold each month to make a monthly profit of $75,000 ? A. 23,000 B. 3,200 C. 13,200 D. 8,000 E. 17,847
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