Manoa Soup Company’s R&D department invents Organic Potato Soup, which is more expensive to produce than the chicken noodle soup described in Question 3. Specifically, the ingredients, the wrapper, and the advertising cost 20% more compared to the chicken noodle soup. To produce Organic Potato Soup, Manoa Soup Company must lease a new set of machines that will cost $450,000 per year. The new machines require additional personnel whose salaries equal $200,000 per year. Manoa Soup Company sells a box of organic potato soup for $12.00 (Each box contains 6 cans). What will be the incremental break-even unit volume (in cans) for the Organic Potato Soup?

Question 3 Details: You are analyzing Manoa Soup Company as a consultant. Manoa Soup Company sells a box of canned chicken noodle soup for $9 (Each box contains 6 cans). The manager of the Manoa Soup Company gives you the following data about the production of the canned soup. Assume that Manoa Soup Company produces only chicken noodle soup and there are no other relevant costs. Product line workers and managers: $140,000 per year Advertising: $0.15/can Ingredients: $0.5/can Individual wrappers: $0.15/can

Answer rating: 100% (QA)

Solution incremental fixed costs new personnel new lease incremental fixed costs 2000... View the full answer