Using data in Exhibit 1, calculate Coxs break-even point in sales dollars (per hen). Taking into account
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Question:
- Using data in Exhibit 1, calculate Cox’s break-even point in sales dollars (per hen). Taking into account his cumulative revenue for a hen, during which week (approximately) will the break-even point occur? (Hint, consider the pre-production costs as fixed for this calculation.)
- Calculate Cox’s investment in the 130,000 hens. Given the average age of the hens at the Summers’ barns and the Thomas’ barns and the break-even analysis, how should Cox use this information in his decision on what to do about losing the CCF Brands contract?
- Given the situation that Cox faces, build on your contribution margin analysis to compare two options:
- (a) keeping the hens through week 78 or (b) euthanizing early. For each calculation, use the average age of the hens at the two different farms. (Hint: Revise a copy of the marginal analysis tables, one for each farm, beginning the analysis at the weeks indicated in the examples below that correspond to hen age.)
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