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A university currently has a recycling program for paper waste. The fixed cost of running this program is $15,000 per year. The variable cost for picking up and disposing of each ton of recyclable paper is $20. If the work is outsourced to a recycling company, the cost would be $60 per ton. a. If the forecasted demand is 900 tons, what should the university do? Use the Break-Even Excel template in MindTap to find your answer. Round your answers to the nearest dollar. Total cost of doing the job in-house: $ Total cost of outsourcing the job: $ So the best decision for the university is to-Select- for a savings of $ b. Find the break-even point using the Excel Goal Seek tool. Round your answer to the nearest whole number. tons

A university currently has a recycling program for paper waste. The fixed cost of running this program is $15,000 per year. The variable cost for picking up and disposing of each ton of recyclable paper is $20. If the work is outsourced to a recycling company, the cost would be $60 per ton. a. If the forecasted demand is 900 tons, what should the university do? Use the Break-Even Excel template in MindTap to find your answer. Round your answers to the nearest dollar. Total cost of doing the job in-house: $ Total cost of outsourcing the job: $ So the best decision for the university is to-Select- for a savings of $ b. Find the break-even point using the Excel Goal Seek tool. Round your answer to the nearest whole number. tons

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Profitability Analysis Cost Revenue Quantity 10,000 Fixed cost $100,000.00 Unit cost $12.00 Unit revenue $20.00 Total Revenue Net Profit Profit or Loss Total Cost $220,000.00 Outsourcing Decision Loss Produce In-House Outsource Quantity 12.000 Fixed cost 250,000.00 Unit cost $20.00 Fixed cost Unit cost $35.00 Technology Choice Decision Option A Option B Quantity Total In-House Production Cost 190,000.00 $200,000.00 Total Outsourced Cost 120,000.00 -$20,000.00 Cost difference (In-House - Outsourced $70,000.00 Cost difference (Option A - Option B) Economical Decision Outsource Economical Decision 11,000 Fixed cost $200,000.00 Unit cost $18.60 Fixed cost $100,000.00 Unit cost $21.00 Total Cost Option A $404,600.00 Total Cost Option B $331,000.00 $73,600.00 Option B
Transcribed Image Text:Profitability Analysis Cost Revenue Quantity 10,000 Fixed cost $100,000.00 Unit cost $12.00 Unit revenue $20.00 Total Revenue Net Profit Profit or Loss Total Cost $220,000.00 Outsourcing Decision Loss Produce In-House Outsource Quantity 12.000 Fixed cost 250,000.00 Unit cost $20.00 Fixed cost Unit cost $35.00 Technology Choice Decision Option A Option B Quantity Total In-House Production Cost 190,000.00 $200,000.00 Total Outsourced Cost 120,000.00 -$20,000.00 Cost difference (In-House - Outsourced $70,000.00 Cost difference (Option A - Option B) Economical Decision Outsource Economical Decision 11,000 Fixed cost $200,000.00 Unit cost $18.60 Fixed cost $100,000.00 Unit cost $21.00 Total Cost Option A $404,600.00 Total Cost Option B $331,000.00 $73,600.00 Option B
A university currently has a recycling program for paper waste. The fixed cost of running this program is $15,000 per year. The variable cost for picking up and disposing of each ton of recyclable paper is $20. If the work is outsourced to a recycling company, the cost would be $60 per ton. a. If the forecasted demand is 900 tons, what should the university do? Use the Break-Even Excel template in MindTap to find your answer. Round your answers to the nearest dollar. Total cost of doing the job in-house: $ Total cost of outsourcing the job: $ So the best decision for the university is to -Select- for a savings of $ b. Find the break-even point using the Excel Goal Seek tool. Round your answer to the nearest whole number. tons
Transcribed Image Text:A university currently has a recycling program for paper waste. The fixed cost of running this program is $15,000 per year. The variable cost for picking up and disposing of each ton of recyclable paper is $20. If the work is outsourced to a recycling company, the cost would be $60 per ton. a. If the forecasted demand is 900 tons, what should the university do? Use the Break-Even Excel template in MindTap to find your answer. Round your answers to the nearest dollar. Total cost of doing the job in-house: $ Total cost of outsourcing the job: $ So the best decision for the university is to -Select- for a savings of $ b. Find the break-even point using the Excel Goal Seek tool. Round your answer to the nearest whole number. tons
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