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points) As part of its promotional efforts, ABS grocery stores utilize weekly flyers at its locations. At each of the 75 stores, the company produces
points) As part of its promotional efforts, ABS grocery stores utilize weekly flyers at its locations. At each of the 75 stores, the company produces an estimated 1,000 promotional flyers per week. Each store uses its own printing shop, and each location incurs the same variable costs to use the machines. Installation costs incurred to set up the machine for printing a new flyer, printing costs (paper, ink, etc.), and maintenance costs comprise total production costs. On average, monthly production costs are estimated to be: $1,000 for installation, $3,000 for printing, and $1,000 for maintenance and are incurred at each location. The management considers moving printing to one centralized location. The company estimates that monthly installation costs for the single machine will be $1,000. Printing costs of $3,000 will remain the same to print 1000 flyers for each of 75 stores. Maintenance costs of a single bigger machine will be $10,000 per month, and distribution of flyers will cost additional $14,000 a month. Will ABS stores be able to exhibit economies of scale by moving printing to a centralized location? How much money will they save each year? You purchased a winning ticket for a $3 million lottery which pays $300,000 immediately and the rest in 9 annual installments. A finance company called you and offered you $2 million in cash. Would you accept the offer if the interest rate is 8%? points) points) A computer company incurs the following costs per tablet: labor $125, materials $45, and rent $500,000 a month. If the firm produces 100,000 tablets a month what are the total costs and total variable costs? What is the break- even price per tablet? points) A print shop wants to expand production. It currently has 20 workers and 8 copiers and recently added two copiers which increased daily output by 100,000. They also added 4 workers which increased output by 80,000. Each copier costs twice as much as hiring an extra worker. What is the best course of action: hiring another employee, or buying an extra copier
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