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Manufacturing Processes Practice Problems 2011_1

Manufacturing Processes Practice Problems 2011_1 - Break...

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Break Even Problem – choosing between processes Pollyeyes Pizza currently mixes and shapes all of its pizza dough by hand. This is a labor intensive process. The variable costs for this process are $3.00 per pizza and the fixed costs are $30,000 per year. If the average selling price is $8.00 per pizza, how many pizzas does Pollyeyes need to sell per year to break even? Pollyeyes’ owner, Pat Polly, is considering investing in an automated process to make and shape the dough. With the new process, fixed costs increase to $42,000 per year but variable costs decrease to $2.00 per pizza. What is the new break-even point? If the sales forecast for Pollyeyes is 10,000 pizzas next year, what is the projected net income for each of the two processes? At what quantity are you indifferent?
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Break Even Problem – choosing between processes Pollyeyes Pizza currently mixes and shapes all of its pizza dough by hand. This is a labor intensive process. The variable costs for this process are $3.00 per pizza and the fixed costs are $30,000 per year. If the average selling price is $8.00 per pizza, how many pizzas does
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