Question

In: Operations Management

The owner of a greenhouse and nursery is considering whether to acquire additional land to grow...

The owner of a greenhouse and nursery is considering whether to acquire additional land to grow a new variety of rosebush. She can either acquire a small garden at $7000 and can produce up to 4,000 rosebushes or a large garden at $10,000 and can produce up to 8,000 rosebushes. The owner could sell each rosebush for $5, and per-unit variable cost would be $3.

a) What would the profit be if she were to produce and sell 6,000 rosebushes?

b) How many rosebushes would she have to produce and sell in order to break even with a large garden?

c) The owner forecasted the demand between 3600 and 4800 rosebushes. Which alternative(s) is/are profitable?

Solutions

Expert Solution

Break-even analysis refers to the technique where the sales volume is identified when the total cost and total revenue is equal. At this point, the company neither makes profit nor loss.

keosha answered 8 months ago
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