Oysters Away picks, shucks, and packs oysters and then sells them wholesale to fine restaurants across the state. The income statement for last year follows:

Pickers, shuckers, and packers are employed on an hourly basis and can be laid off whenever necessary. Salespeople mostly deliver the product and are paid on a salaried basis.

REQUIRED
A. Estimate the cost function for Oysters Away.
B. What is the breakeven point in cases for Oysters Away?
C. The manager thinks that the company will harvest and sell 3,000 cases of oysters next year.
Estimate the after-tax income.
D. Oysters Away harvested and sold 2,000 cases in each of the last several years. What does this suggest about the quality of the income information you calculated in part (C)?
E. Describe reasons why the cost function developed for the relevant range up to 2,000 cases might not hold for 2,001 to3,000.

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Revenue (based on sales of 2,000 cases of oysters) Expenses: $200,000 Wages for pickers, shuckers, and packers Packing materials Rent and insurance Administrative and selling $100,000 20,000 25,000 45,000 Pretax income Taxes (20%) After-tax income 190,000 10,000 2,000 $ 8,000