What is the maximum amount you will pay for the new process
Course:- Financial Management
Reference No.:- EM131313958

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A manufacturer makes 7,900,000 bottles of supplements per year. Each bottle takes 0.4 minutes of direct labor at the rate of $8 per hour. The overhead costs are estimated at $11 per direct labor hour. The new process will reduce the unit production time by 0.01 minutes. If the overhead cost will be reduced $5.50 for each hour by which total direct hours are reduced, what is the maximum amount you will pay for the new process? Assume that the new process must pay for itself by the end of the first year.

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