Question
Killington Garage Doors has undertaken several sustainability projects over the past few years. Management is currently evaluating whether to develop a comprehensive software control system
Killington Garage Doors has undertaken several sustainability projects over the past few years. Management is currently evaluating whether to develop a comprehensive software control system for its manufacturing operations that would significantly reduce scrap and waste generated during the manufacturing process. If the company were to implement this software control system in its manufacturing operations, the use of the software control system would result in an increase of $ 30 comma 000 in its annual fixed costs while the average variable manufacturing cost per door would drop by $ 150. 1. What is the company's current breakeven in units and in dollars? 2. If the company expects to sell 320 premium garage doors in the upcoming year, and it does not develop the software control system, what is its expected operating income from premium garage doors? 3. If the software control system were to be developed and? implemented, what would be the? company's new? break-even point in units and in? dollars? 4. If the company expects to sell 320 premium garage doors in the upcoming year, and it develops the software control system, what is its expected operating income from premium garage doors? 5. If the company expects to sell 320 premium garage doors in the upcoming year, do you think the company should implement the software control system? Why or why not? What factors should the company consider? Data: Average selling price per premium garage door $3,000 Average variable manufacturing cost per door $540 Average variable selling cost per door $210 Total annual fixed costs $270,000
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