Break-even point: The kitchen supplier at Freddie's informs the team...

Billythekidd

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Hi all,

This is my first post on this website, and I have posted a picture of the question, please let me know if I have to do it otherwise.

I'd appreciate your help in setting up a break even equation for this question. Assume that this company operates 10 hours per day.

Thanks a lot,

Bill
 

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Okay, so you're given the problem statement and four possible answers. When given a multiple choice question, one tactic is to simply try all four answers and see which one works. Let's try that process here. Start by assuming the answer is a.

We're told that Freddie's restaurant processes 9 kg of shrimp per day, and that each kg of shrimp takes 20 minutes to peel and de-vein. How many minutes of labor would 9 kg of shrimp take? We're also told that in addition to the time spent processing shrimp, there is a fixed time of 20 minutes per day. After you add that in, how much time is spent per day? We're told each hour of labor costs $6. So, how much does it cost to run the restaurant for one day? We're told that the restaurant is open 350 years a year, and that a machine will last for 3 years. How many total days is that? Using our known figure for one day's cost, how much would it cost to manually peel shrimp for the lifetime of the machine?

Now compare that with the cost of running the machine. Here, it takes 1 hour per 10 kg of shrimp processed. How long would it take the machine to process 9 kg? We're told there's a fixed 1 hour of labor for cleaning the machine and whatnot. After you add that in, how much time is spent per day? Again, each hour of labor costs $6, so much is spent per day? The restaurant operates 350 days per year for 3 years, so how much total is spent? Now, we have to add in the cost of purchasing and running the machine, which we are told costs a fixed $10,500. What does that make the total cost for the machine method?

Compare your answers. Does it cost less to run the machine than to manually peel shrimp? If yes, you know a is the correct answer. If not, you know Freddie's needs to peel more shrimp per day to break even. So, begin at the top by assuming that b is the correct answer.
 
attachment.php


Hi all,

This is my first post on this website, and I have posted a picture of the question, please let me know if I have to do it otherwise.

I'd appreciate your help in setting up a break even equation for this question. Assume that this company operates 10 hours per day.

Thanks a lot,

Bill
What have you done? Please show your work so we will know where to help you. If you a stuck at the beginning, let us know and possibly we can give you some definitions which will help. Also, have you read the 'Read before Posting'
http://www.freemathhelp.com/forum/announcement.php?f=36

HINT: Break even is when the two methods are equal, so compute the cost for break even
Manual = (labor for S shrimp per day + cleanup) * number of days
Machine = (labor for S shrimp per day + cleanup) * number of days + other costs

What value of S are these two equal?
 
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