An outside supplier has offered to produce the corn chips for $20 per batch. If all fixed costs can be eliminated, how much will Hungry Bites save if it accepts the offer?

Hungry Bites can save on their fixed costs if it accepts an offer to manufacture corn chips from an outside provider for only $20 per batch. The company incurs fixed costs in the amount of $200,000 to produce its corn chips. These could be avoided if production is outsourced.

The savings would depend on how many batches of corn chips are produced each year; for example if 100 batches are made annually then there would be a saving of $2000 ($20000 – ($20 x 100)). Savings could be much greater if this figure was significantly increased. In addition, outsourcing production also means that less time and resources have to be invested in maintaining equipment or dealing with any issues that may arise – instead these tasks can be left up to the supplier who has more experience in these matters.

Outsourcing production allows Hungry Bites’ to concentrate on their other business aspects, such as product development or marketing without worrying about the manufacturing side of things. This means that profits will increase because overhead costs are reduced while still producing high-quality goods.

In conclusion it is clear that accepting the offer from an outside supplier could provide significant cost savings for Hungry Bites if all fixed costs associated with producing their own corn chips were eliminated – however careful consideration should still be taken before deciding whether or not outsourcing is right for them as there may also be potential disadvantages depending on individual circumstances.