A large agricultural farm in BC sends its cherries to a food packaging company for processing and packing before the cherries are sent to the retailers. A truck load of cherries costs $1,500 to ship to the packaging company and another $4,500 for the packaging and processing service. If the farm sets up its own processing and packaging plant, the annual fixed cost will be $120,000 and the packaging and processing of a truckload will cost $2,500.
Determine the range of annual quantities (truckloads) for which each of the alternatives will be best to op from a managerial standpoint.
identifying variable costs (0.5), writing the break-even condition (0.5), final break-even quantity (1), and managerial suggestions about alternatives (0.5)

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To determine the range of annual quantities for which each alternative outsourcing vs setting up own processing plant is the best from a managerial st... View the full answer