Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Samoset Fans, Inc. manufacturers its fan blades in-house. The owner, Betty Dice, doesn't outsource any fan parts except fan motors all other fans parts are

Samoset Fans, Inc. manufacturers its fan blades in-house. The owner, Betty Dice, doesn't outsource any fan parts except fan motors all other fans parts are made in-house. Their current process and its equipment are getting old. Maintenance and repair costs are increasing at twelve percent per year. She and her company team are evaluating two new processes. The first process has an annual fixed cost of $740,000 and a variable cost of $17 per fan blade. The second process is more automated and requires an annual fixed cost of $1,350,000 and a variable cost of $13 per fan blade. The internal transfer cost of a fan blade is $21, and this helps the firm determine the total manufactured cost of a completed fan. Use the Excel template Break-Even in MindTap to answer the following questions: What is the break-even quantity between these two processes? Round your answer to the nearest whole number. fan blades If predicted demand for next year is 150,000 blades, what process do you recommend? Round your answers to the nearest dollar. Total cost of Process A: $ Total cost of Process B: $ So, -Select- is recommended. What is the cost savings? Round your answer to the nearest dollar. $ What volume of demand does Samoset Fans, Inc need to make an internal profit on fan blades of $110,000, assuming they installed the process you recommend in part (b)? Round your answer to the nearest whole number. fan blades

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

Operations Management Processes and Supply Chains

Authors: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman

12th edition

134741064, 9780273766834, 027376683X, 9780273766940, 273766945, 9780273766841, 273766848, 978-0134741062

More Books

Students also viewed these General Management questions