What is the maximum fixed cost that zipco should be willing, Ask an Expert

Management Studies

Calculate the maximum fixed cost in the given case

Zipco is in serious negotiations to purchase a chunking machine that will enable them to perform their own chunking at $1.25 per unit. They currently have their chunking outsourced at a cost of $1.75 per unit and a fixed cost of $48,000. Their marketing team feels that they can sustain an annual volume of 15,000 units. What is the maximum fixed cost that Zipco should be willing to bear in order to perform their own chunking?

Select one:
a. $55,500
b. $57,500
c. $50,000
d. $52,500

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9277183

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