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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