Question

"A company currently operates its flour mill 6 days per week (Monday through Saturday). Flour sells for $23.06 per hundredweight (cwt) and the company purchases wheat at a price of $5.55 per bushel. 2.57 bushels of wheat are required per cwt of flour. Fixed costs are currently $8,879 per day of operation. The labor cost of mill operations is $0.95 per cwt. If the company decides to operate on Sunday, the labor cost of Sunday operations increases to $1.20 per cwt. If the mill were to operate on Sunday, the fixed cost on Sunday would increase by $661. If the company decides to operate 7 days a week, what is the weekly break-even volume in terms of cwt? Assume the same amount of flour is produced in each day of the week. HINT: You need to calculate the average daily variable cost for labor for a 7-day operation."

Answer 1