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338 PART 2 Designer Operations pro PC a. What is the break-even quantity for the manual pecess? sight rooms available, but only two are suitable for four adults, and b. What is the revenue the beak-even quantity for the manual four rooms will not have private bath. Below are the details of proce! profit and demand patterns that will accompany cach option What is the break-even quantity for the mechanized process d. What is the revenue at the break-even quantity for the mecha Annual Profit under Wout and process Demand Putters e. What is the monthly profit or loss of the manual process if they Alternatives Average expect to well 60.000 bags of lettuce per month A modernite all) $90,000 3 $25.000 5 1. What is the monthly profit or loss of the mechanised procesit B (modernize20d) $50,000 4 $70,000 6 they expect to sell 60,000 bags of lettuce per month Catequo) 560,000 $55.000 7 Al what quantity would Zan and Angela be indifferent to the process selected? h. Ove what range of demand would the proces be pro Which option has the highest apected monetary value? PX fected over the mechanized procesa? Over what range of demand *-*57.29 As operation manager of Hot Furnitor, you must make would the mechaniced procent be preferred over the manuala decision about adding a time of rustic furniture. In discussing the pos sibilities with your sales manager, Steve Gilbert, you decide that there ...57.26 As a prospective owner of a club known as the Red Howeve, becue rute faniture has a different finish than your sta will definitely be a market and dut your fimm should enter that marit Rose, you are interested in determining the volume of sales dollars Decemary for the coming year to reach the break even point. You doubt in your mind about the decision and you are see that you dard for you decide you need for proclint. There is no have decided to break down the sales for the club into four te should have a second process. But you do question how luge to make ta gories, the first category being beer. Your estimate of the beer sales is that 30.000 drinks will be served. The selling price for tach unit it A large process line is going to con$100.000 a mall procesine will average $1.50, the cost is 5.75. The second major category will com $300,000. The question, therefore, is the demand for rustic forniture. After extensive discos w Me Gilbert and Thin eland meals, which you expect to be 10.000 units with an average price of $10.00 and cost of $5.00. The third tajor caligoy is deserts and of Ireland Market Research Inc, you determine that the best estimate wie, of which you also expect to all 10,000 units, but with an you can make is that there is a two-out-of-the chance of profit from average price of $2.30 per unit sold and cost of $1.00 per. The sales lunge wa $600,000 and a one- of-tree chance as low $300.000 final category is lunches and inexpensive sandwiches, which you expect to total 20,000 units of an average price of $6.25 with a food With a large process line, you could handle the high figure of cost of 33.25. Your fixed cost (that is, utilities, and so on) is 5600,000. However, with a small process line you could be and 51.800 per month plus $2,000 per month for entertainment would be forced to expand (at a cow of $150.000, after which time & What is your break-even pointln dollars per month your profit from sales would be $500,000 ather than the $600.000 b. What is the expected number of als each day if you we open and the small process your profit from sales would be belo because of the last time in apanding the process. If you do not 30 days 3 months 5400,000. If you build a small process and the demand is low, you 57.27 At manager of the St. Cloud Theatre Computy, you can handle all of the demand have decided that concessionals will support themselves. The fol Should you open a large all process line? lowing the provides the information you have been able to put .. $7.30 What is the neprest value of an invent that co together to far: 575.000 and has a sige value of $45.000 The anal profit from the investment is $15.000 each year for 5 years. The cost of capital Item Selling Price Variable Cost Revenue at this moklevels 12 PC Soft drink 31.00 5.65 Wie 1.25 25 87.31 The initial cost of at vesti 165.000 and the com Coffee 1.00 30 of capital is 10%. The clue is 516,000 per year for 3 years. What is Candy 1.00 20 the prevale PC $7.22 What is the pret value of 55,600 who the intentate Last year's manager, Jim Freeland, heed you to be to 18 and the man of $3,600 will not be cerved for 15 yeun PC add 10 of variable costs a waste allowance for all categorie 57.33 Tim Smunt has been asked to evaluatwe machines You estimate the cost to be $250.00 (5 booth with 2 people. After some vestigation, he dermines that they have the costs cacti). Even if nothing is sold you labor cost will be $250.00, 10 shown in the following. He is told to me that you decide to sider this and cost. Booth real, which is com a) the life of each machine la 3 years, and tractul cout $50.00 for each booth porslight is also a fixed cost the company thinks it a low to make 126 on investment - What is becak olur per evening performance? Doorskyn this b. How much wine would you expect to sell at the break-even? - 57.26 Law's Bed and Breakfast in historie Machine A Machine B Mississippi tuwn, mut decide how to subdividere til Original cos S1000 $20,000 old me that will become in. There are the native Lahorper year 2.000 4,000 Opis A would modemice all hate and counting room, ling Maintenance per year 4,000 1.000 Gets with low, each with two to poor wol. Option Salage value 2.000 7,000 I would modernite unly the second flowers would be si wit four focuse four adults, two for two adults only. On Deline is the present al method, which machine The Cheap) leaves all wall intact. In the case the should recommend 1982 AARA S7.28 James Lawson's Bed and Breakfast, in a small historic Mississippi town, must decide how to subdivide (remodel) the large old home that will become its inn. There are three alternatives: Option A would modernize all baths and combine rooms, leaving the inn with four suites, each suitable for two to four adults. Option B would modernize only the second floor, the results would be six suites, four for two to four adults, two for two adults only. Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms available, but only two are suitable for four adults, and four rooms will not have private baths. Below are the details of profit and demand patterns that will accompany cach option: Alternatives A (modernize all) B (modernize 2nd) C(status quo) Annual Profit under Various Demand Patterns High Average $90,000 .5 $25,000 .5 $80,000 .4 $70,000 .6 $60,000 .3 $55,000 .7 Which option has the highest expected monetary value? PX