ZootSuit, a marketing firm, produces an average of 15,000 pieces of marketing collateral per year (i.e., flyers,

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ZootSuit, a marketing firm, produces an average of 15,000 pieces of marketing collateral per year (i.e., flyers, web pages, presentations, logos, etc.) with a variable cost of $300 per piece. Company leadership wants to increase theoutput. ZootSuitis considering a subscription in new cloud-based software costing an incremental increase of $30,000 per year.This investment would incrementally decrease the variable cost per piece of marketing collateral by an estimated $50. Current firm overhead related to the production of marketing collateral is $400,000.

a) What does it cost ZootSuit to produce at the current rate? What about with the software?

b) Should ZootSuit invest in the new software?

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