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Parag Ice Cream Company sells a variety of ice cream products. Although the company sells many ice cream products of different sizes, its volume of
Parag Ice Cream Company sells a variety of ice cream products. Although the company sells many ice cream products of different sizes, its volume of business is measured in gallons of ice cream sold. Parag's contribution margin is $4.80 per gallon. Retail sales price averages $12 per gallon of ice cream. Monthly fixed operating expenses for a typical store are $9,000. RequiredGo back to the original situation. Parag's stores are now open 12 hours daily (from 9 a.m. to 9 p.m.). Management is considering a proposal to decrease store hours by opening two hours later each morning. The change would reduce sales volume by an average of 125 gallons per month and cut fixed costs (utilities and wages) by $500. Would it pay for the company to change its store hours? Show your computations.
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