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Question - Cesar's Bottlers bottles soft drinks in a factory that can operate one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on weekends. The sales price of $3 per case bottled and the variable cost of $1.70 per case remain constant regardless of volume. Cesar's Bottlers can increase volume by opening and staffing additional shifts. The company has the following three choices.
Daily Volume Range (Number of Cases Bottled)
Total Fixed Costs per Day
1 Shift
0-2,000
$2,370
2 Shifts
2,001-3,600
4,450
3 Shifts
3,601-5,000
6,110
Required -
a. Calculate the break-even point(s).
b-1. Calculate the profit (or loss) for each alternative, assuming Cesar's Bottlers can sell all the units it can produce.
b-2. Should Cesar's Bottlers operate at one, two, or three shifts?
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