A Hospital currently prepares its own food. Information regarding the food service is as follows:

Meals per week: 5,800

Variable cost per meal: $4.60

Fixed cost: $9,200 per week

An outside kitchen resource proposes the following:

Rent a new oven for $13,000 per week

Savings with new oven: $2.90 per meal

New fixed costs for food preparation: $6,000 per week (previously $9,200 per week)

What is the break even point with the new oven?

Besides costs, what other factors should be considered when purchasing a new oven?

Do you recommend the purchase of the oven? Why or Why not?

Answer rating: 100% (QA)

To determine the breakeven point with the new oven we need to compare the costs of the current food preparation method with the costs of using the new ... View the full answer