Part Two 65 Points 8. Bazooka Company is thinking about introducing a new type of color printer. If they introduce it, their factory will incur additional fixed costs of $37,000,000 per year. The variable costs will be S261 per printer a. If Bazooka sells the new printer for $819, how many must they sell to break even? b. If Bazooka sells 70,000 of the new printer at the $819 price, what will the contribution to profit be? 9. Sam Smear owns a manufacturing company that makes ball point pens. Currently he is trying to decide between two processes for making the pens. The first process will have a fixed cost of $200,000 per year and variable costs of S0.40 per pen. The second process will have a fixed cost of S250,000 per year and variable costs of $0.30 per pen. a. Identify which ranges of product volume are best for each process b. If Sam makes 200,000 pens, which process provides a lower cost? 10. Wills omelet factory produces 2,500 omelets a day. Theyve determined that their daily fixed costs are $4,000 with a variable cost of fifteen cents per omelet. a. (a) What is the total cost to make a days omelets, and b. (b) what should Will charge for each omelet to make a 10% profit, rounded to the next whole dollar? 11. Simuelson Industries can produce its own motors for a S60,000 fixed monthly cost and a $50 variable cost per unit. Alternatively, Simuelson Industries can purchase the motors from an outside supplier for S50,000 per month and $58 per unit a. What is the indifference point? b. What option should be chosen if monthly demand is 1200 units?
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