a university currently has a recycling program for paper waste. the fixed cost of running this program is…

a university currently has a recycling program for paper waste. the fixed cost of running this program is $25,000 per year. the variable cost for picking up and disposing of each ton of recyclable paper is $30. if the work is outsourced to a recycling company, the cost would be $80 per ton.\n a. if the forecasted demand is 900 tons, what should the university do? use the break - even excel template in mindtap to find your answer. round your answers to the nearest dollar.\n total cost of doing the job in - house: $square$\n total cost of outsourcing the job: $square$\n so the best decision for the university is to select for a savings of $square$.\n b. find the break - even point using the excel goal seek tool. round your answer to the nearest whole number.\n $square$ tons

a university currently has a recycling program for paper waste. the fixed cost of running this program is $25,000 per year. the variable cost for picking up and disposing of each ton of recyclable paper is $30. if the work is outsourced to a recycling company, the cost would be $80 per ton.\n a. if the forecasted demand is 900 tons, what should the university do? use the break - even excel template in mindtap to find your answer. round your answers to the nearest dollar.\n total cost of doing the job in - house: $square$\n total cost of outsourcing the job: $square$\n so the best decision for the university is to select for a savings of $square$.\n b. find the break - even point using the excel goal seek tool. round your answer to the nearest whole number.\n $square$ tons

Answer

Explanation:

Step1: Calculate in - house total cost

The in - house total cost formula is $C_{in}=FC + VC\times Q$, where $FC$ (fixed cost) = $25000$, $VC$ (variable cost per unit) = $30$, and $Q$ (quantity) = $900$. $C_{in}=25000+30\times900$ $C_{in}=25000 + 27000$ $C_{in}=52000$

Step2: Calculate outsourcing total cost

The outsourcing total cost formula is $C_{out}=P\times Q$, where $P$ (price per unit) = $80$ and $Q$ (quantity) = $900$. $C_{out}=80\times900$ $C_{out}=72000$

Step3: Determine the best decision

The savings from choosing the in - house option is $C_{out}-C_{in}=72000 - 52000=2000$. So the university should do the job in - house.

Step4: Calculate the break - even point

Let the break - even point be $x$ tons. Set $FC + VC\times x=P\times x$. $25000+30x = 80x$ $25000=80x - 30x$ $25000 = 50x$ $x=\frac{25000}{50}=500$

Answer:

Total cost of doing the job in - house: $$52000$ Total cost of outsourcing the job: $$72000$ So the best decision for the university is to do the job in - house for a savings of $$2000$ Break - even point: $500$ tons