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galina1969 [7]
3 years ago
10

AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.50 per unit and a selling price of $1.40

per unit. Fixed costs are $14,000. Current sales volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would increase to $0.60, but sales volume should jump to 50,000 units due to a higher-quality product. Should AudioCable buy a new equipment?
Business
1 answer:
Sedaia [141]3 years ago
5 0

Answer: Yes. AudioCable should buy a new equipment

Explanation:

Audiocables Inc. without new equipment:

Selling price: $1.40

Variable cost: $0.50

Fixed cost: $14,000

Sales: 30000 units

Total cost = Fixed cost + Variable cost

= $14000 + ($0.50 × 30000)

= $14000 + $15000

= $29000

Revenue = Sales × Selling price

= 30000 × $1.40

= $42000

Profit = Revenue - Total Cost

= $42000 - $29000

= $13000

Audiocables Inc. with new equipment:

Selling price: $1.40

Variable cost: $0.60

Fixed cost: $14,000 + $6000 = $20000

Sales: 50000 units

Total cost = Fixed cost + Variable cost

= $20000 + ($0.60 × 50000)

= $20000 + $30000

= $50000

Revenue = Sales × Selling price

= 50000 × $1.40

= $70000

Profit = Revenue - Total Cost

= $70000 - $50000

= $20000

From the calculations made, AudioCable buy a new equipment as profit generated is more.

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Answer:

$3,284.8

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7 0
3 years ago
Aziz company sells two types of products, Baste and Deluxe . The company provides technical support for users of its products at
klio [65]

Answer:

1.$25

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Basic $5,500

Explanation:

1. Calculation to determine the company's cost of technical support per customer service call.

Using this formula

Cost of technical support per customer service call = Expected cost / Expected customer service call

Let plug in the formula

Cost of technical support per customer service call = $150,000 / 10,000

Cost of technical support per customer service call = $25 per customer service call

Therefore the company's cost of technical support per customer service call is $25 per customer service call

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8 0
3 years ago
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Answer:

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Explanation:

According to the scenario, the given data are as follows:

Average checks per day = $14,000

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Answer:

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