Rogers Manufacturing Company Makes High Quality Canvas Tents AWhat Would the Savings Be If Demand Is 70,000 Tents

question 56

Essay

Rogers Manufacturing Company makes high quality canvas tents. Their production manager is considering a change from its manual system of stitching to an automated system. The following are the costs for the two systems:
$\begin{array}{|l|c|c|}\hline \text { System } & \text { Fixed Cost } & \text { Variable Cost } \\\hline \text { Manual } & \$ 35,000 & \$ 12.50 \\\hline \text { Automated } & \$ 80,000 & \$ 8.50 \\\hline\end{array}$
a.What would the savings be if demand is 70,000 tents and the automated system is used?
b.What would the savings be if demand is 20,000 tents and the automated system is used?

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