Cesar's Bottlers bottles soft drinks in a factory that can operate one shift, two shifts,...
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Cesar's Bottlers bottles soft drinks in a factory that can operate one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on weekends. The sales price of $3 per case bottled and the variable cost of $1.70 per case remain constant regardless of volume. Cesar's Bottlers can increase volume by opening and staffing additional shifts. The company has the following three choices.
| Daily Volume Range (Number of Cases Bottled) | Total Fixed Costs per Day | |||
| 1 Shift | 02,000 | $ | 2,370 | |
| 2 Shifts | 2,0013,600 | 4,450 | ||
| 3 Shifts | 3,6015,000 | 6,110 | ||
Required:
a. Calculate the break-even point(s).
b-1. Calculate the profit (or loss) for each alternative, assuming Cesars Bottlers can sell all the units it can produce.
b-2. Should Cesar's Bottlers operate at one, two, or three shifts?
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