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The KFUs Company is currently operating its mill six days a week, 2 4 hours a day, onthree shifts. At current prices, the company could

The KFUs Company is currently operating its mill six days a week, 24 hours a day, onthree shifts. At current prices, the company could easily obtain a sufficient volume of sales totake the entire output of a seventh day of operation each week. The mills practical capacity is7,000 hundred weight of flour per day. Note that Flour sells for SAR 13 a hundred weight(cwt.) and the price of wheat is SAR 5.0 a bushel. About 2.35 bushels of wheat are requiredper cwt. of flour. Fixed costs now average SAR 5,530 a day, or SAR 0.79 per cwt. The averagevariable cost of mill operation, almost entirely wages, is SAR 0.5 per cwt. With Sundayoperation, wages would be doubled for Sunday work, which would bring the variable cost ofSunday operation to SAR 0.9 per cwt. Total fixed costs per week would increase by SAR 500(or SAR 33,333) if the mill were to operate on Sunday.(a) Using the information provided, compute the break-even volumes for sixday and seven-day operation.(b) What are the marginal contribution rates for six-day and seven-day operation?(c) Compute the average total cost per cwt. for six-day operation and the net profit margin percwt. before taxes.(d) Would it be economical for the mill to operate on Sundays?

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