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Business, 22.02.2020 03:30 bree249

Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $42,000, but inventory would increase by $420,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 11.5 percent.

A. Determine the extra cost or savings of switching over to level production. Should the company go ahead and switch to level production?

B How low would interest rates need to fall before level production would be feasible?

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