Harrison Hotels is considering adding a spa to its current facility in order to improve its list of amenities. Operating the spa would require a fixed cost of $23,800 a year. Variable cost is estimated at $40 per customer. The hotel wants to break even if 11.900 customers use the spa facility. What should be the price of the spa services? (Round answer to 2 decimal places, eg. 15.25.) Price of services $ Gabriela Manufacturing must decide whether to insource or outsource a new toxic-free miracle carpet cleaner that works with its Miracle Carpet Cleaning Machine. If it decides to insource the product, the process would incur $200,000 of annual fixed costs and $1.35 per unit of variable costs. If it is outsourced, a supplier has offered to make it for an annual fixed cost of $100,000 and a variable cost of $2.15 per unit in variable costs. a. Given these two alternatives, determine the indifference point (where total costs are equal). Indifference point units b. If the expected demand for the new miracle cleaner is 360,000 units, what would you recommend that Gabriela Manufacturing do? is a cheaper alternative. The actual difference between the total costs of insourcing and outsourcing may b Downhill Boards (DB), a producer of snow boards, is evaluating a new process for applying the finish to its snow boards. Durable Finish Company (DFC) has offered to apply the finish for $170,000 in fixed costs and a unit variable cost of $0.60. Downhill Boards currently incurs a fixed annual cost of $135,000 and has a variable cost of $0.85 per unit. Annual demand for the snow boards is 180,000. a. Calculate the annual cost of the current process used at Downhill Boards. Annual cost of current process $ b. Calculate the annual cost if Durable Finish Company applies the finish. - Annual cost $ c. Find the indifference point for these two alternatives. units Indifference point d. How much of a change in demand is needed to justify outsourcing the process? (Round percentage answer to decimal places, eg. 5%) units or % Change in demand The Steiner-Wallace Corporation has determined that it needs to expand in order to accommodate growing demand for its laptop computers. The decision has come down to either expanding now with a large facility, incurring additional costs and taking the risk that the demand will not materialize, or expanding small, knowing that in three years management will need to reconsider the question Management has estimated the following chances for demand: The likelihood of demand being high is 0.67 The likelihood of demand being low is 0.33. Profits for each alternative have been estimated as follows: Large expansion has an estimated profitability of either $121,000 or $50,000, depending on whether demand turns out to be high or low. Small expansion has a profitability of $32,000, assuming that demand is low. Small expansion with an occurrence of high demand would require considering whether to expand further. If the company expands at that point, the profitability is expected to be $67,000. If it does not expand further, the profitability is expected to be $41,000. (b) Calculate the expected values for large and small expansions and decide what Steiner-Wallace should do. EV small expansion $ EV ang pansion $ Company sould opt expansion