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The general manager asks you to review the data provided by the production manager, ignoring tax implications in your analysis, and quantify the impact of
The general manager asks you to review the data provided by the production manager, ignoring tax implications in your analysis, and quantify the impact of replacing Machine 1. The general manager also asks you to discuss the pros and cons of each of the options discussed in the meeting, and to provide an overall recommendation. BBL produces the blades for all makes and models of Emerson Hunting knives exclusively sold at Bass Pro. BBL started to produce knives, called the Magnolia line, that is catered to the female consumer market. BBL sells 105,000 units each year at a price of $100 per unit and a contribution margin of 40%. A survey of Emerson's customers over the past 12 months indicates that customers were very satisfied with the products, but a disturbing number of customers were disappointed because the products they purchased did not fit their standard hunting belts. They then had to hassle with returns and replacements. BBL's managers want to modify their production processes to develop products that more closely match Emerson's specifications because the quality control in place to prevent ill-fitting products from reaching customers is not working very well
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