Question
Thunder Hollow Inc. makes and sells hood ornaments for $118 each. The company is considering upgrading its machinery, which would increase its fixed costs
Thunder Hollow Inc. makes and sells hood ornaments for $118 each. The company is considering upgrading its machinery, which would increase its fixed costs to a total of $28,000. However, the new machinery is more efficient and would lower variable costs from $75 to $40 per unit. If Thunder Hollow believes it is equally likely that they will sell 4,000 to 8,000 ornaments next year, then what is the operating leverage for the new machinery? (round to the nearest thousandth, e.g., 85.6% would be 0.856).
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Managing Operations Across the Supply Chain
Authors: Morgan Swink, Steven Melnyk, Bixby Cooper, Janet Hartley
2nd edition
9780077535063, 007802403X, 77535065, 978-0078024030
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