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Given the following data for Albert's fabricating production area:
Fixed costs for one shift: $60,000.00
Unit variable cost: $7
Selling price: $12
Number of machines: $6
Number of working days in a year: 340
Processing time per unit: 40 minutes
a) What is the annual capacity with a single eight-hour shift?
b) What is the capacity with two shifts?
c) What is the break-even volume with a single-shift operation?
d) What is the maximum revenue with a single shift?
e) What is the break-even volume with a two-shift operation?
Charles Lackey operates a bakery in Idaho Falls, Idaho. Currently, the bakery has 4 employees, each one working 160 hours per month. Because of its excellent product and excellent location, demand has increased by 30% in the last year.
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The manager's rationale is that with a U-shaped cost curve that is fairly flat at its minimum, the difference intotal annual cost between 800 and 801 units would be small anyway.
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