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  3. 3. mr. rude now informs you that he is considering

3. Mr. Rude now informs you that he is considering automating the Garden Shed production...

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Accounting

3. Mr. Rude now informs you that he is considering automating the Garden Shed production line further. The new equipment that he is considering purchasing would produce a higher quality product, he believes, which may have a positive impact on sales. If the equipment is purchased he plans to hold the selling price (P) of the Garden Shed constant at its current level: $6,500. However, the production costs will change , as follows: The new variable cost per unit (VC) will be $2,100. Fixed costs (F) applicable to the Garden Shed will total $5,200,000 for the fiscal year. a. What is the new operating breakeven point in units for the Garden Shed, based on these new assumptions that feature a more automated production line? I b. Based on the new operating breakeven point in units that you calculated in Question #3.a., what is the new operating breakeven point for the Garden Shed in sales dollars? 4. Do you recommend that Storage Sheds & More continue with their current production process for the Garden Shed product or convert to the new, more automated , production process ? Please describe.

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