You are hired as a consultant for Skater Boys Incorporated, a firm with over five years experience in the skate board industry.Due to changing demand and a move to environmentally friendly products, the company wishes to enter the market with a new eco-friendly finish on its skate boards. Based on your analysis of the company'soperations, Skater Boys Inc has three main choices. After careful inspection of their current equipment the company can spend $800 in refurbishment of their old equipment or make major modifications to its operations at a cost of $1100. If these options are not taken, they can also choose to purchase new equipment at a cost of $1800.

If the firm chooses to refurbish their existing equipment, materials and labour per skate board will be $1.10 while a material and labour cost of $0.70 per board is associated with the major modification choice. If however the company chooses to buy new equipment, the associated variable cost is estimated to be $0.40 per board.

You are required to do the following analysis

Question

If the actual demand for skate boards is 4500, how should Skater Boys Inc proceed?(5 marks)