# The Hamilton Flour Company is currently operating its mill six days a week, 24 hours a day on 3… 1 answer below »

The Hamilton Flour Company is currently operating its mill six days a week, 24 hours a day on 3 shifts. At current prices, the company could easily obtain a sufficient volume of sales to take the entire output of the seventh day of operation each week. The mills practical capacity is 6,000 hundredweight (cwt) of flour per day. ? Flour sells for \$12.40 a cwt and the price of wheat is \$4.34 a bushel. About 2.35 bushels of wheat are required per cwt of flour. Fixed costs now average \$4,200 a day (or \$0.70 per cwt). The average variable cost of mill operations, almost entirely wages, is \$0.34

»The Hamilton Flour Company is currently operating its mill six days a week, 24 hours a day on 3 shifts. At current prices, the company could easily obtain a sufficient volume of sales to take the entire output of the seventh day of operation each week. The mills practical capacity is 6,000 hundredweight (cwt) of flour per day. ? Flour sells for \$12.40 a cwt and the price of wheat is \$4.34 a bushel. About 2.35 bushels of wheat are required per cwt of flour. Fixed costs now average \$4,200 a day (or \$0.70 per cwt). The average variable cost of mill operations, almost entirely wages, is \$0.34 per cwt). ? With Sunday operation, wages would double for Sunday work. Total fixed costs (actually semi fixed) per week would increase by \$420 (total of \$4620 for Sunday and \$4200 for the other 6 days) if the mill were to operate on Sunday. a. Using the information provided, compute the breakeven volumes for 6 day and 7 day operations. b. Compute the average total cost per cwt for the 6-day operation. c. Would it be economical for the mill to operate on Sundays? Please justify your answer.

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