Faber Corporation, a basketball hoop manufacturing firm in Hickory, Indiana, plans to branch out and begin producing basketballs in addition to basketball hoops. It has a choice of two different production methods for basketballs. Method 1 will have variable costs of $6 per ball and fixed costs of $700,000 for the high-tech machinery, which requires little human supervision. Method 2 employs many people to hand-sew the basketballs. It has variable costs of $16.50 per ball, but fixed costs are estimated to be only $100,000. Regardless of which method CEO Norman Dale chooses, the basketballs will sell for $30 each. Marketing research indicates sales in the first year will be 50,000 balls. Sales volume is expected to increase to 60,000 in year 2. Calculate the sales revenue expected in years 1 and 2.

Faber Corporation, a basketball hoop manufacturing firm in Hickory, Indiana, plans to branch out and begin producing basketballs in addition to basketball hoops. It has a choice of two different production methods for basketballs. Method 1 will have variable costs of $6 per ball and fixed costs of $700,000 for the high-tech machinery, which requires little human supervision. Method 2 employs many people to hand-sew the basketballs. It has variable costs of $16.50 per ball, but fixed costs are estimated to be only $100,000. Regardless of which method CEO Norman Dale chooses, the basketballs will sell for $30 each. Marketing research indicates sales in the first year will be 50,000 balls. Sales volume is expected to increase to 60,000 in year 2. Calculate the sales revenue expected in years 1 and 2.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter11: Linear Optimization Models

Section: Chapter Questions

Problem 1P: Kelson Sporting Equipment, Inc., makes two types of baseball gloves: a regular model and a catchers...

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