Sipacore Herbal Supplements purchases, in bulk, a variety of dietary supplements that the company bottles, packages, and ships to health-food stores and drugstores around the country. The company has a good reputation, and its products are in high demand. Last year the company purchased mechanical packaging equipment for$325,200 and reduced its shipping department by two people, eliminating an annual salary expense of $121,360. When it works, the equipment packages product 20 percent faster than the previous manual system. Unfortunately, the equipment has broken-down on many occasions for up to four hours. Normally (when the packaging equipment is working), the company packages 2,100 bottles per hour, and the average contribution margin per bottle is $0.70. The general manager of operations has suggested that the company rehire the two packaging workers as backup for the new packaging system. The company president doesn’t think this is a good idea since the workers will only be working around 10 hour per week when the equipment is down and “sitting around doing nothing for 30 hours per week!

Calculate the incremental profit of hiring back the two workers. (Round answer to 0 decimal places, e.g.125.)

Choose if it is an incremental profit or loss of hiring back the two workers $______________ per year.

Please show your work. I want to be sure to get understand how to calculate this. Thank you in advance! 

Answer rating: 100% (QA)

Bottles packaged per hour manually 210012 1750 ... View the full answer