Q1. Calculating Processing Requirements

A department works one 8-hour shift, 250 days a year, and has these figures for usage of a machine that is currently being considered:

Q2. The owner of Old-Fashioned Berry Pies, Simon Chen, is contemplating adding a new line of pies, which will require leasing new equipment for a monthly payment of $6000. Variable costs would be $ 2.00 per pie, and pies would retail for $7.00.

a) How many pies must be sold in order to break-even?

b) What would the profit be if 1000 pies are made and sold in a month?

c) How many pies must be sold to realize a profit of $4000?

d) If 2000 can be sold, and a profit target is $5000, what price should be charged per pie?

Q3. A manager has the option of purchasing one, two, or three machines. Fixed costs and potential volumes are as follows:

a) Determine the break-even point for each range.

b) If projected annual demand is between 580 and 660 units, how many machines should the manager purchase?

Product Annual demand Standard Processing Processing time needed time per unit 5 2000 1 400 2 300 8 2400 3 700 2 1400 5800 Number of Machines 1 Total annual Fixed Costs $9 600 Corresponding range of output 0-300 2 15000 301-600 3 20000 601-900 VC is $10 per unit and R is $40 per unit