Reference no: EM133183065

Question - W.C. Wood largest freezer manufacturer has 2 plants in Guelph one in US 1 in Mexico. Whirlpool converted from using cardboard packaging to using plastic stretch wrap with clear view packaging. VP manufacturing wondering whether to convert. Damage warranty cardboard box (1-3 % depending on type of freezer).  Only do question for Guelph.

Cardboard box 2 workers to box a appliance, Clear view automated. Labor and materials reduced by 50 cents and $1.50 per unit. Electricity costs increase by $10,000 per year. Stretch wrap equipment by MSK Covertech cost $130,000. Fitting of corner posts on each freezer required another machine which cost $140,000, in addition all lift truck arms had to be converted to clamp type at a total cost of $30,000

1. What was the total variable cost saving per freezer?

2. What was the total investment cost per year if all peices of equipment was expected to last 10 years (use straight line depreciation)?

3. How many freezers per year would the Guelph plant need to produce to break even in the clear view packaging conversion?