Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would...

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Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by
 $36,900, but inventory costs would increase by $410,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 10.5 percent. (a-1) Determine
 the extra cost or savings of switch over to level production. (Input the amount as positive value. Omit the "$" sign in your response.) $ (a-2) Should the company
 go ahead and switch to level production? Yes No (b) How low would interest rates need to fall before level production would be feasible? (Omit the "%" sign in your
 response.) Interest rate %

Robert · Accepted Answer

Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur 
under level production, and aftertax costs would decline by $36,900, but inventory costs would increase 
by $410,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 10.5 percent.

Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $36,900, but inventory costs would...

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