Question: Problem S7.25

a. Zan and angela started A&Z lettuce products. They will help vendors and they can adequately estimate demand, fixed costs, revenues and variable cost per 5-pound bag of lettuce. They think a largely manual process will have monthly fixed costs of $37,500 and variable costs of $1.75 per bag. A more mechanized process will have fixed costs of $75,000 per month with variable costs of $1.25 per 5-pound bag . They expect to sell the shredded lettuce for $2.50 per 5 pound bag

what is the break even quantity for manual process?

what is the revenue at the break even quantity for the manual process?

What is the break even quantity for the mechanized process

What is the revenue at the break even quantity for the mechanized process?

What is the monthly profit of loss of the manual process if they expect to sell 60,000 bags of lettuce per month?

At what quantity would zan and angela be indifferent to the process selected?

Over what range of demand would the manual process be preferred over the mechanized process? Over what range of demand would the mechanized process be preferred over the manual process