AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.75 per unit and
Fantastic news! We've Found the answer you've been seeking!
Question:
AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.75 per unit and a selling price of $1.50 per unit. Fixed costs are $14,000. Current sales volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would increase to $0.75, but sales volume should jump to 50,000 units due to a higher-quality product.
a. What is the current profit and proposed profit of the sales of AudioCables? (Negative amounts should be indicated by a minus sign.) Current profit $ Proposed profit $
b. Should AudioCables buy the new equipment?
Related Book For
Operations and Supply Chain Management
ISBN: 978-0078024023
14th edition
Authors: F. Robert Jacobs, Richard Chase
Posted Date: