Question

The Ozzie Chocolate Company is preparing to offer a new product in its candy offerings, the Minty Dark Chocolate Bite bar. Material costs per new candy bar are

$0.25 for chocolate, $0.02 for sugar, and $0.03 for mint flavoring. Labor costs of the new product are approximately $0.15 per bar. Adding a production line devoted to the new candy will cost $250,000 per year.

(a) If the sales price is $1.40 per candy bar, how many must the company make per year in order to break even? Assume that each bar made is sold at full price.

(b) What is the company's profit or loss if they make and sell 270,000 candy bars at the $1.40 price in the first year?

(c) About 20% of the food consumed in the U.S. is imported. Production in many industries has been offshored. What ethical issues do companies face when presented with the decision to move operations?

Answer 1

a) 263,158

b) $164,500

c) Ethical issues companies face when deciding to move operations: job loss for employees, poor working conditions and exploitation of workers, negative environmental impact,...

Explanation:

a)

Total cost = (0.25 + 0.02 + 0.03 + 0.15) x + 250,000

Total revenue = 1.40x

Setting the two equations equal to each other and solving for x, we get:

(0.45)x + 250,000 = 1.40x

0.95x = 250,000

x ≈ 263,158

b)

If the company sells 270,000 candy bars at $1.40 each, the total revenue generated is:

270,000 * $1.40 = $378,000

The total cost of producing 270,000 candy bars is:

(0.25 + 0.02 + 0.03 + 0.15) * 270,000 + $250,000 = $213,500

Therefore, the company's profit is:

$378,000 - $213,500 = $164,500

c)

Ethical issues companies face when presented with the decision to move operations: job loss for employees, poor working conditions and exploitation of workers, negative environmental impact,...