The new process that requires higher initial investment

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Reference no: EM131270068

RR Corp is a company that produces rubber rafts. This new company is considering an initial investment of $2,000. Labor and material cost is approximate $5 per raft. Each raft can be sold at a price of $10 each. Another possibility is a price with larger initial investment, $10,000 for more automated equipment that will reduce the variable cost to $2 per raft.

a. Considering this information, at what volume does RR Corp produce using the first process?

b. What volume should RR corp change to the new process that requires higher initial investment?

Reference no: EM131270068

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