# Having been in a good business for years, a bakery shop is now considering an upgrade

Having been in a good business for years, a bakery shop is now considering an upgrade. Currently, the shop mainly operates manual processes with only \$1, 500 fixed cost a year and \$40 for each cake it produces. Hilda, the owner is reviewing two alternatives: semi-automatic and full-automatic equipment. Semi-automatic equipment can lower down the cost to only \$25 a cake at \$6,000 fixed cost a year. Using full-automatic equipment can reduce the cost significantly to \$12 a cake. However, the fixed cost will increase to \$15,000 a year. a. Which alternative should Hilda choose? b. Draw the graph to illustrate this situation

Assume that the bakery shop produces x number of cakes in a year

Total cost in current situation,

Don't use plagiarized sources. Get Your Custom Essay on
Having been in a good business for years, a bakery shop is now considering an upgrade
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!

Total cost = fixed cost + variable cost

= fixed cost + (cost for each cake * no. of cakes produced)

= \$1,500 + \$40 * x

Total cost of semi-automatic situation,

Total cost = fixed cost + variable cost

= fixed cost + (cost for each cake * no. of cakes produced)

= \$6,000 + \$25 * x

Total cost of full-automatic situation,

Total cost = fixed cost + variable cost

= fixed cost + (cost for each cake * no. of cakes produced)

= \$15,000 + \$12 * x

Let’s calculate total cost of production by assuming number for x

 No. of cakes produced in a year (x) Total cost under current situation Total cost under semi-automatic situation Total cost under full-automatic situation 100 5500 8500 16200 200 9500 11000 17400 300 13500 13500 18600 400 17500 16000 19800 500 21500 18500 21000 600 25500 21000 22200 700 29500 23500 23400 800 33500 26000 24600 900 37500 28500 25800 1000 41500 31000 27000

a. If the bakery shop is producing below 300 cakes per year then current situation is most cost effective for them

If the bakery shop is producing between 300 -700 cakes per year then semi-automatic situation is most cost effective for them

And if the bakery shop is producing more than 700 cakes per year then full-automatic situation is most cost effective for them

b. Graphical illustration of situation.

Order NOW For a 10% Discount!
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

## Calculate the price of your order

Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

## Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.