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    Managerial Decision Making - CVP Analysis

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    A distributor of pre-washed shredded lettuce is opening a new plant and considering whether to use mechanized process or manual process to prepare the product. The manual process will have a fixed cost of $43,400 per month and a variable cost of $1.80 per 5-pound bag. The mechanized process would have a fixed cost of $84,600 per month and a variable cost of $1.30 per bag. The company expects to sell each bag of shredded lettuce for $2.50.

    (a)Find the break-even point for each process.

    (b)What is the monthly profit or loss if the company chooses the manual process and sells 70000 bags per month?

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    Solution Summary

    Solution depicts the steps to calculate BEP and monthly profit in the given case.

    $2.19

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