Compute break-even volumes for 6-day and 7-day operation

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Reference no: EM13294733

The Hamilton Flour Company is currently operating its mill 6 days a week, 24 hours a day, on three shifts. The company could easily obtain a sufficient volume of sales at current prices to take the entire output of a seventh day of operation each week. The mill's practical capacity is 6,000 hundred weight of flour per day. • Flour sells for $12.40 a hundredweight (cwt.) and the price of wheat is $4.34 a bushel. About 2.35 bushels of wheat are required per cwt. of flour. Fixed costs now average $4,200 a day, or $0.70 per cwt. The average variable cost of mill operation, almost entirely wages, is $0.34 per cwt. • With Sunday operation, wages would be doubled for Sunday work, which would bring the variable cost of Sunday operation to $0.66 per cwt. Total fixed costs per week would increase by $420 (or $29,820) if the mill were to operate on Sunday. a) Using the information provided above, compute the break-even volumes for 6-day and 7-day operation.

Reference no: EM13294733

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