Question: ( 5 marks: 3 , 1 , 1 ) A small brewery reuses its own empty bottles, but it does not have a bottle -
marks:
A small brewery reuses its own empty bottles, but it does not have a bottlecleaning machine. A delivery truck collects the empty bottles from liquor stores and bars and brings them back to the brewery. Once enough empty bottles accumulate, the truck transports them to a cleaning facility and brings back clean bottles. The cleaning facility charges cents to wash a bottle, and cost of trucking is cents per bottle. Management is thinking of buying an automated bottlecleaning machine. The machine costs $ million and has a useful life of years. The brewery will use the machine only when enough empty bottles accumulate. The operating cost of the machine will be $ per hour, and it can wash bottles per minute.
a At what quantity of bottles would total annual cost of cleaning inhouse equal total annual cost of outsourcing the cleaning?
Marks are for: identifying variable and fixed costs writing the breakeven condition and final breakeven quantity
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