1. A restaurant is considering adding fresh brook trout to its menu. Customers would have the choice of catching their own trout from a simulated mountain stream or simply asking the waiter to net the trout for them. Operating the stream would require $11,475 in fixed costs per year. Variable costs are estimated to be $6.50 per trout. The firm wants to break even if 900 trout dinners are sold per year.

What should be the price of the new item? $___ (Enter your response rounded to the nearest penny.)

2. White Tiger Electronics produces CD players using an automated assembly line process. The standard cost of CD players is $156 per unit (labor, $32; materials, $69; and overhead, $55). The sales price is $325 per unit.

To achieve a 14 percent multifactor productivity improvement by reducing materials costs only, one needs to reduce the materials cost by ____ percent. (Enter your response as a percent rounded to two decimal places.)

3. Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,500 per unit. Efforts to standardize parts succeeded to the point that this same component can now be used in five different products. Annual component usage should increase from 150 to 850 units. Management wonders whether it is time to make the component in-house, rather than to continue buying it from the supplier. Fixed costs would increase by about $60,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $1,000 per unit, and labor costs would be $350 per unit produced.

Should Hahn make rather than buy?

Hahn should ___MAKE? or BUY?___ the components, saving $_____ per year as compared to the other decision. (Enter your response rounded to the nearest whole number.)