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The General Hospital currently prepares the food for their patients: Information regarding the food preparation department is as follows: meals per week: 4400 variable cost
The General Hospital currently prepares the food for their patients: Information regarding the food preparation department is as follows: | ||||||||
meals per week: | 4400 | |||||||
variable cost per meal | $3.75 | |||||||
fixed cost | $12,000 | per week | ||||||
a) A representative of the Easy-Bake Oven Company has come to you with a proposal: | ||||||||
rent their oven for $16,000 per week; with this state-of-the-art oven; your variable cost per meal will drop $2.95 per meal | ||||||||
hence the new variable cost per meal will be $0.80 and the fixed costs of 12,000 drop to 8,900. | ||||||||
what is the break even point for the Easy-Bake-Oven? | ||||||||
besides cost, what other factors should you consider in deciding whether or not to use the Easy-Bake-Oven? | ||||||||
Do you recommend using the Easy-Bake-Oven? Why or why not | ||||||||
show your work; |
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