Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Q 6 IKEA is exploring two machines to produce adjustable table legs, which have been in high demand since the launch of online classes after
Q IKEA is exploring two machines to produce adjustable table
legs, which have been in high demand since the launch of online
classes after the outbreak of Covid The first machine say A
would cost $ and incurs a variable cost of $ per leg. The
second machine say B costing $ and the variable cost
per leg is only $ Each leg made from machine A needs a
scratchproof bottom bush which costs $ The furniture store
sells each leg at $ to the customers.
a What is the breakeven volume for machine A Also, find
the breakeven point in dollars.
b What is the breakeven volume for machine B Also, find
the breakeven point in dollars.
c If the store expects a sale of legs, which machine A or
B will you choose? Also, provide the 'opportunity loss' if
the furniture store does not determine the better machine.
d If the breakeven volume of is legs, what price
should A charge for each leg?
e Find the volumes of both processes such that A has
legs less than B and the profit is $ less than BQ Carrefour wants to launch its brand of instoregrown
organic lettuce in small bags. The supermarket has two options
for processing harvested lettuce: manual processing say A and
mechanized processing say B The manual process will incur a
monthly processing cost of $ and a variable cost of $ per
bag, while the mechanized process will incur a monthly
processing cost of $ and a variable cost of $ per bag.
Besides, the mechanized process needs a recyclable bag costing
$ bag to Carrefour. The store expects to fix the price at $
per bag, irrespective of the processes.
a What is the breakeven volume for the manual process?
Also, find the breakeven point in dollars.
b What is the breakeven volume for the mechanized
process? Also, find the breakeven point in dollars.
c Which process will you use if you expect sales of
bags monthly? Also, provide the opportunity loss of profit
if the store does not determine the better method.
d At what sales volume is the profit from the sales made
from the mechanized process more than the profit from the
sales made from the manual process by $
e Find the bags of sales both processes such that the manual
method has bags more than the mechanized method,
and the profit of the mechanized process is $ less than
the manual process.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started