Broom produce the mop with the new or current equipment

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Reference no: EM131475449

Mop and Broom Manufacturing has decided to produce a new type of mop. The mop can be made with the current equipment in place. Estimates of fixed costs per year are $40,000, and the variable cost for each mop produced is $19. However, the company is considering the purchase of new equipment that would produce the mop more efficiently. The fixed cost would be raised to $51,000 per year, but the variable cost would be reduced to $16 per unit. The company still plans to sell the mops at $24 per unit. Should Mop and Broom produce the mop with the new or current equipment? Specify the volume of demand for which you would choose each process.

Reference no: EM131475449

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