Truck Bed Manufacturing Seenario-April 3, 2019 Imagine you are the owner of Specialized Truck Beds, Inc (STB). STB is currently providing truck beds for Caterpillar for their trucks used in the mining industry. STB was formed five years thapper to aterpillar and the only product produced are beds for the CMT10, the largest mining truck only Caterpillar offers. While you have the remainder of the original ten-year lease on your current production facility, you deal with your current plant and production of 30 CMT10s do not owe anything on the manufacturing equipment. Caterpillar prefers to a single supplier when they have the capacity to fulfill their total demand. Unfortunately, equipment can only produce 25 units a month, less than Caterpillar's planned While your equipment is now paid for, you know that it is not particularly efficient. Furthermore, you are concerned that you might start experiencing breakdowns that cou your contract with Caterpillar. Thus, you have started looking at new equipment to refurbish your assembly line. The salesperson from Ace Equipment Company is trying to get you to purchase their line of machinery, which is far more automated than your current equipment. you are considering putting in a bid to Caterpillar to provide beds for the CMTS model. If space in your plant, and to add a second production line you would have to you were to produce the CMTS beds, it would require additional manufacturing equipment. You currently have limited free s lease an additional 10,000 square feet of space from AAA Distributing, your brother-in-law's business, for $4 8,000 a year. You have already received a bid from Ace Equipment to provide manufacturing equipment for the CMTS line at a cost of $112,000. Ace's Machinery For CMT10 CMT5 Machinery Current Situation Current Plant lease (annual) Machinery lease (annual) Cost of material (per unit) Cost of labor (per unit) Selling price (per unit) Total demand (per month) Capacity (per month) $330,000 $ 000 S 7,000 3,000 $330,000 $150,000 S 7,000 S 2,550 $ 12,500 30 units 30 units $330,000 $112,000 S 5,500 S 1,500 $12,500 40 units 50 units 30 units 25 units 1. What is the eurrent break-even volume (per month) for STB? 2. What is the current annual profit or (loss) for STB from CMT10 sales 3. What is the minimum volume of CMT10s per month that STB needs to by leasing the new equipment for the CMT10 from Ace? to increase their profit 4. If Ace did lease the new equipment and only built the CMTI0, what would their annual profit be