CAPACITY PLANNING- Worked answers for 7-13

# CAPACITY PLANNING- Worked answers for 7-13 - MGO302...

This preview shows pages 1–2. Sign up to view the full content.

MGO302 Capacity Planning Questions 7-13 Information for Questions 7 & 8: High Speed Foods, a local sandwich shop, has purchased a \$2,000 high-horsepower blender to produce smoothies to add to High Speed’s menu. Smoothies have a variable cost of \$2.00 each, and the \$2,000 purchase price of the blender is the only relevant fixed cost associated with smoothies that High Speed is aware of. Please answer the following three questions, based on this information. 7. Assuming that High Speed Foods charges \$3.00 for a smoothie, how many smoothies does High Speed have to sell to make exactly \$1000 in profit from the purchase of this blender? Formula: Quantity = (Profit + Fixed Costs) / (Price – Variable Costs per unit) (Stevenson pg 194, 9e) Profit = \$1000, Fixed Costs = \$2000, Price = \$3.00, Variable Cost per unit = \$2.00 Quantity = (1000 + 2000) / (3.00 – 2.00) = 3000 / 1 = 3,000 smoothies Choice e 8. What is the lowest a smoothie can be priced while still allowing High Speed Foods to break-even on the blender by the time they sell their 500 th smoothie? Formula : Profit = Quantity * (Price – Variable Cost per unit) – Fixed Cost (Stevenson pg

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 08/30/2011 for the course MGO 302 taught by Professor Hancock during the Fall '08 term at SUNY Buffalo.

### Page1 / 3

CAPACITY PLANNING- Worked answers for 7-13 - MGO302...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online