Zipco Is in Serious Negotiations to Purchase a Chunking Machine

question 32

Multiple Choice

Zipco is in serious negotiations to purchase a chunking machine that will enable them to perform their own chunking at $1 per unit. They currently have their chunking outsourced at a cost of $1.50 per unit and a fixed cost of $45,000. Their marketing team feels that they can sustain an annual volume of 10,000 units. What is the maximum fixed cost that Zipco should be willing to bear in order to perform their own chunking?

• A) $50,000
• B) $45,000
• C) $40,000
• D) $35,000

---

Definitions:

Agricultural Crop

An agricultural crop is a plant or plant product that can be grown and harvested extensively for profit or subsistence.

Western Expansion

The 19th-century movement of settlers into the American West, encouraged by policies like Manifest Destiny, affecting Native American lands and leading to the establishment of new states.

Slavery

A framework where people are possessed by others, lacking in personal liberty, and forced to carry out work or services.

Fur Trappers

Individuals or explorers, particularly in the 18th and 19th centuries, who trapped and traded animal fur, significantly contributing to the European settlement and exploration of North America.