A local restaurateur, Cho Senn, is considering three options for his new Asian fusi restaurant. Option A- called Midtown - will have annual fixed costs of 42,500 ar variable costs of 3.45 per customer. Option B - called Market - will have annual fixed costs of 30,000 and variable costs of 4.40 per customer. Finally Option C- called Mall has annual fixed cost of 19,500 and variable costs of 5.25 per customer. If Mr. Cho averages 8.25 in revenue per customer, what volume is required to breakeven with Option B?
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- During a major expansion in 2004, Douwalla’s Import Company developed a new processing line for which the delivered equipment cost was $1.75 million. This year, the board of directors decided to expand into new markets and expects to build the current version of the same line. Estimate the cost if the following factors are applicable: construction cost factor is 0.20, installation cost factor is 0.50, indirect cost factor applied against equipment is 0.25, and the total plant cost index has risen from 2509 to 3713 over the years.A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $11,152 per month and variable costs of $1.23 per unit produced. Each item is sold to retailers at a price that averages $2.07 a) The volume per month is required in order to break even = Blank 1 (in whole number) b) The profit or loss would be realized on a monthly volume of 61,000 units Blank 2 c) The volume is needed to obtain a profit of $16,000 per month = Blank 3 (in whole number) d) The volume is needed to provide revenue of $23,000 per month = Blank 4 (in whole number)Operation management Hansen is interested in leasing a sports-utility vehicle and has contacted three automobile dealers for pricing information. Each dealer offered Hansen a 24-month lease with no down payment due at the time of signing. Each lease includes a monthly cost, mileage allowances, and the cost for additional miles. The details are given in the below table. Hansen decided to choose the lease option that will minimize his total 24-month cost. He is not sure how many miles he will drive in the next two years. Hence, for the purpose of decision, assume that Jase wants to evaluate options of driving 20,000 miles per year, 23,000 miles per year, and 25,000 miles per year. a. What is the decision, and what is the chance event?b. Construct a payoff table for Hansen’s problem.
- a) For an upcoming red carpet evening, a company is selling tickets at $60 per person at a large theatre which has a capacity of 10,000 people. Each attendant is expected to buy $12 of food and merchandise at the film evening. The cost of providing the food and merchandise is estimated to be $5 per person. All other ancillary services will be provided by the theatre. Initial analysis indicates that the ancillary cost of providing food and merchandise, as well as the staff needed to handle ticket sales, may be described as a semi-variable cost. Data on these costs and tickets sold from three similar events held at the venue have been collected and are tabulated below: Tickets Sold Cost ($) 2100 6640 3824 11284 4650 13525 Use the high-low method to estimate the total cost function relating to these ancillary costs. b) The company will be renting the theatre which will host the upcoming red carpet evening. The budgeted fixed cost of both renting the theatre and paying the…A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $11,152 per month and variable costs of $1.23 per unit produced. Each item is sold to retailers at a price that averages $2.07 a) The volume per month is required in order to break even = ( ) (in whole number) b) The profit or loss would be realized on a monthly volume of 61,000 units = ( ) c) The volume is needed to obtain a profit of $16,000 per month = ( ) (in whole number) d) The volume is needed to provide revenue of $23,000 per month = ( ) (in whole number)Cost Estimation; Average Cost Chloe’s Cafe bakes croissants that it sells to local restaurants andgrocery stores. The average costs to bake the croissants are $0.55 for 2,500 and $0.50 for 5,000.Required If the total cost function for croissants is linear, what will be the average cost to bake 4,200?
- 2. A company is analyzing a make-versus-purchase situation for a component used in several products and the engineering department has developed these data: Option A: Purchase 10,000 items per year at a fixed cost of Php 340 per item. The cost of placing the order is negligible according to the present cost accounting procedure. Option B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials= Php 200 per item and direct labor = Php 60 per item. Manufacturing overhead is allocated at 200% of direct labor. Based on these data, should the item be purchased or manufacture?Dawson Electronics is a manufacturer of high-tech control modules for lawn sprinkler systems. Denise, the CEO, is trying to decide if the company should develop one of the two potential new products, the Water Saver 1000 or the Greener Grass 5000. With each product, Dawson can capture a bigger market share if it chooses to expand capacity by buying additional machines. Given different demand scenarios, their probabilities of occurrence, and capacity expansion versus no change in capacity, the potential sale of each product are summarized in the included table. Click the icon to view the table. What is the expected payoff for the Water Saver 1000 and the Greener Grass 5000, with and without capacity expansion? The expected payoff for the Water Saver 1000 with the capacity expansion is $ integer.) The expected payoff for the Water Saver 1000 without the capacity expansion is $. (Enter your response as an integer.) ਗਿਆ (Enter your response as an The expected payoff for the Greener Grass…The Candle Company plans to open a new retail store in Portland, Maine. The store will sell specialty candles for an average of $10 each. The average variable costs per candle are as follows: Wax $4 Other additives $2 Base $1 The company is negotiating its lease for the new location. The landlord has offered two leasing options: Option A) a lease of $2,500 per month; or Option B) a monthly lease cost of $2,000 plus 10% of the company's monthly sales revenue. The lease option that is more attractive for the company under its current sales expectations is option B, the fixed lease payment plus sales based commission because it results in the lowest total lease costs The indifference point is The company expects to sell approximately 400 candles per month. Requirement 2. At what level of sales (in units) would the company be indifferent between the two lease options? Show your proof. candles. Begin by selecting the equation to determine the indifference point. (Abbreviations used" FC =…
- A firm’s manager must decide whether to make or buy a certain item used in the production of vending machines. Making the item would involve annual lease costs of $150,000. Cost and volume estimates are as follows:Make BuyAnnual fixed cost $150,000 None Variable cost/unit $ 60 $ 80 Annual volume (units) 12,000 12,000 a. Given these numbers, should the firm buy or make this item?b. There is a possibility that volume could change in the future. At what volume would the managerbe indifferent between making and buying?An operations manager wants to use factor rating method to decide the location of a new restaurant. Weights of the three factors specified, and the scores of two options are shown in the table below. Which option should the operations manager choose and what is the weighted score of this option? Factor Weight Option 1 Score Option 2 Score Proximity to the University 0.5 90 80 Rental Cost 0.3 80 100 Size 0.2 70 70 Option 2, weighted score = 84 Option 2, weighted score = 83 Option 1, weighted score = 83 There is no difference between the two options Option 1, weighted score = 84Below is a decision table for Gregor's Tennis School. Director Gregor Anderson is considering expanding his school to accommodate the potential increased interest in youth tennis lessons, camps and teams. The decision table below describes his situation. Alternatives Add a new building Extend hours for existing building Do Nothing Answer Decision Table Step 1 of 3: What is the estimated payoff for adding a new building during moderate demand? $ High Demand 40,000 30,000 0 State of Nature Moderate Demand 5,000 4,700 0 Low Demand -45,000 -6,000 0 Tables Keypad Keyboard Shortcuts