In The Fresh Connection you had the option of purchasing a module that can beadded to a bottling line that, inflates little preformed PET bottles (preforms), into fullsize PET bottles. If this module is added, then these preforms can be purchased atthe supplier, instead of full size PET bottles. Preforms take significantly less spacethan full size PET bottles, namely a factor of 10 and they cost half of what a ready-made PET bottle costs. Adding the module will cost an extra €140,000 per annumand an investment of €700,000. Where will the savings come from that will offsetthe €140,000 per annum and investment of €700,000?

As it is mentioned that the PET bottles are more effective as these can be inflated into the…

Answered: PET bottles. Preforms take s ya factor…

Business

Accounting

PET bottles. Preforms take s ya factor of 10 and they cos ne module will cost an extra

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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Question

In The Fresh Connection you had the option of purchasing a module that can be
added to a bottling line that, inflates little preformed PET bottles (preforms), into full
size PET bottles. If this module is added, then these preforms can be purchased at
the supplier, instead of full size PET bottles. Preforms take significantly less space
than full size PET bottles, namely a factor of 10 and they cost half of what a ready-
made PET bottle costs. Adding the module will cost an extra €140,000 per annum
and an investment of €700,000. Where will the savings come from that will offset
the €140,000 per annum and investment of €700,000?

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