Kim Epson operates a full-service car wash, which operatesfrom 8 a.m. to 8 p.m., 7 days a week. The car wash has two sta-tions: an automatic washing and drying station and a manualinterior cleaning station. The automatic washing and dryingstation can handle 30 cars per hour. The interior cleaningstation can handle 200 cars per day. Based on a recent year-end review of operations, Kim estimates that future demandfor the interior cleaning station for the 7 days of the week, expressed in average number of cars per day, would be asfollows:Day Mon. Tues. Wed. Thurs. Fri. Sat. Sun.Cars 160 180 150 140 280 300 250By installing additional equipment (at a cost of $50,000), Kimcan increase the capacity of the interior cleaning station to300 cars per day. Each car wash generates a pretax contribu-tion of $4.00. Should Kim install the additional equipment ifshe expects a pretax payback period of three years or less?
Kim Epson operates a full-service car wash, which operates
from 8 a.m. to 8 p.m., 7 days a week. The car wash has two sta-
tions: an automatic washing and drying station and a manual
interior cleaning station. The automatic washing and drying
station can handle 30 cars per hour. The interior cleaning
station can handle 200 cars per day. Based on a recent year-
end review of operations, Kim estimates that future demand
for the interior cleaning station for the 7 days of the week,
expressed in average number of cars per day, would be as
follows:
Day Mon. Tues. Wed. Thurs. Fri. Sat. Sun.
Cars 160 180 150 140 280 300 250
By installing additional equipment (at a cost of $50,000), Kim
can increase the capacity of the interior cleaning station to
300 cars per day. Each car wash generates a pretax contribu-
tion of $4.00. Should Kim install the additional equipment if
she expects a pretax payback period of three years or less?
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