11-33 Equipment upgrade versus replacement. (A. Spero, adapted) The TechGuide Company produces and sells 7,500 modular computer desks per year at a selling price of $750 each. Its current production equipment, purchased for $1,800,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of So and is depreciated on a straight-line basis. The equipment has a current disposal price of S450,000. However, the emergence of a new molding technology has led TechGuide to consider either up- grading or replacing the production equipment. The following table presents data for the two alternatives: Review Home Insert Page Layout Formulas Data B 1 Upgrade 2 One-time equipment costs $3,000,000 3 Variable manufacturing cost per desk $ 150 4 Remaining useful life of equipment (in years) 3 5 Terminal disposal value of equipment $ 0 Replace $4,800,000 $ 75 3 $ 0 Revenue and cost data for each type of cookie are as follows: Home Insert Page Layout A 7 8 9 Revenue per batch 10 Variable cost per batch 11 Contribution margin per batch 12 Monthly fixed costs 13 (allocated to each product) Formulas Data B Della's Bonny's Delight Bourbon $ 475 $ 375 175 125 $ 300 $ 250 $18,650 $22,350 1. Using D to represent the batches of Della's Delight and B to represent the batches of Bonny's Bourbon made and sold each day, formulate Shirra's decision as an LP model. 2. Compute the optimal number of batches of each type of cookie that Della Simpson, Inc., should make and sell each day to maximize operating income. 11-49 Dropping a customer, activity-based costing, ethics. Justin Anders is the management ac- countant for Carev Restaurant Supply (CRS), Sara Brinkley, the CRS sales manager and Justin are