Question 15 Pts Base Case Scenario 7 Selling Price 4 Variable Costs Break Even Volume One Q29490033

An entrepreneurial friend of yours is thinking about starting a car wash business. This individual knows that youre studying operations management and has asked you for help on deciding whether to install one or two wash lines in the initial location. The entrepreneur provides some assumptions: $7 selling price of a wash $4 variable cost per wash Monthly fixed costs of $8000 for one line, $13,000 for two lines . . . Each line can process 20 cars per hour 18-24 cars per hour forecast demand . 250 hours of operation per month

Question 15 pts

Under the ‘base case’ scenario of $7 selling price and $4variable costs, the break-even volume of one car wash line is:

4,333 units2,667 units1,857 units1,143 units20 cars per hour

Question 25 pts

Under the ‘base case’ scenario of $7 selling price and $4variable costs, the profitability of operating a single car washline:

Is higher than the profitability of operating two car washlines across the entire 18-24 car/hr forecast range of demand.Is higher than the profitability of operating two car washlines when forecast demand is greater than 20 cars/hr.Is lower than the profitability of operating two car wash linesacross the entire 18-24 car/hr forecast range of demand.Is higher than the profitability of operating two car washlines when forecast demand is greater than 22 cars/hr.

Question 35 pts

Under the ‘optimistic’ scenario of $9 selling price and $2variable costs, break even volume ____ compared to the ‘base case’scenario.

increases for one car wash lines but decreases for two car washlinesremains the same for both one and two car wash lineoperationsdeclines for one car wash lines but increases for two car washlinesdeclines for both one and two car wash line operations

Question 45 pts

Under the ‘optimistic’ scenario of $9 selling price and $2variable costs, the profitability of operating a single car washline:

Is higher than the profitability of operating two car washlines when forecast demand is greater than 20 cars/hr.Is higher than the profitability of operating two car washlines across the entire 18-24 car/hr forecast range of demand.Is lower than the profitability of operating two car wash lineswhen forecast demand is greater than 22 cars/hr.Is lower than the profitability of operating two car wash linesacross the entire 18-24 car/hr forecast range of demand.

Question 55 pts

In both the ‘base case’ and ‘optimistic’ scenarios, capacityutilization of the one car wash line option is higher than thecapacity utilization of the two car wash line option.

TrueFalse

Question 65 pts

Valid ideas for managing peak demand periods for this car washoperation include all of the following EXCEPT:

Hiring temporary workers to hand-wash cars during peakperiodsLowering prices during peak periodsAdvertising more during off-peak periodsOffering coupons during off-peak periodsAn entrepreneurial friend of yours is thinking about starting a car wash business. This individual knows that you’re studying operations management and has asked you for help on deciding whether to install one or two wash lines in the initial location. The entrepreneur provides some assumptions: $7 selling price of a wash $4 variable cost per wash Monthly fixed costs of $8000 for one line, $13,000 for two lines . . . Each line can process 20 cars per hour 18-24 cars per hour forecast demand . 250 hours of operation per month Show transcribed image text

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