Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ned and Larry's Ice Cream Company produces specialty ice cream and frozen yogurt in pint-sized containers. The latest annual performance report praised the firm for

image text in transcribed
Ned and Larry's Ice Cream Company produces specialty ice cream and frozen yogurt in pint-sized containers. The latest annual performance report praised the firm for its progressive policies but noted that environmental issues like packaging disposal were a concern. In an effort to reduce the effects of consumer disposal of product packaging, the report stated that Ned and Larry's should consider the following proposals: Proposal A-Package all ice cream and frozen yogurt in quart containers. Proposal B-Package all ice cream and frozen yogurt in half-gallon containers. By packaging the product in containers larger than the current pints, the plastic-coated bleached sulfate board containers will hold more ounces of product per square inch of surface area. The net result is less discarded packaging per ounce of product consumed. Additional advantages to using larger containers include lower packaging costs per ounce and less handling labor per ounce. Changing to a larger container requires redesign of the packaging and modifications to the filling production line. The existing material-handling equipment can handle the pints and quarts, but additional equipment will be required to handle half-gallons. Any new equipment purchased for proposals A and B has an expected useful life of six years. The total capital investment for each proposal is shown in the accompanying table. Current (Pints) (A) Quarts (B) Half-Gallons First Cost ($) SO Assume any value Assume any value between 1 and 2 between 1 and 2 million million First cost of B is more than first cost of A Packaging Cost (S/year) Assume any value Assume any value Assume any value between 2 and 3 between 2 and 3 between 2 and 3 million million million Packaging Cost for Packaging Cost for B A is more than is more than A Current Handling labor cost Assume any value |Assume any value Assume any value ($/year) between 1 and 2 between 1 and 2 between 1 and 2 million million million Handling Cost for A | Handling Cost for B is more than Current |is more than A Postconsumer landfill Assume any value Assume any value Assume any value contribution from | between 30,000 and | between 30,000 and between 30,000 and discarded packaging cost 90,000 90,000 90,000 ($/year) Landfill Cost for A |Landfill Cost for B is is more than Current | more than A Salvage value ($) 20% of the first cost | 20% of the first cost Ned and Larry's uses a MARR of 15% per year. Determine whether Ned and Larry's should package ice cream and frozen yogurt in pints, quarts, or half-gallons, in the following cases: a. Using the present worth method with equal lives of 6 years. b. Using the present worth method with different lives: pints 3 years, quarts 4 years, and half- gallons 6 years, by using the Least common multiple (LCM) of lives. C. Using the present worth method with equal lives of 6 years and the study period is 5 years. d. Using the annual worth method with different lives: pints 3 years, quarts 4 years, and half- gallons 6 years. e. Using the annual worth method with different lives: pints 5 years, quarts 10 years, and half- gallonsoo years

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics Principles Applications And Tools

Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez

7th Edition

978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234

More Books

Students also viewed these Economics questions