Reference no: EM133026398

Question - An automobile manufacturer is considering one of two systems for its windshield assembly line. The first is a robotic system that should save money due to a reduction in labor and material cost. This robotic system will cost $400,000. Current practice is to recover this cost over the first two years. One full-time technician and one full-time material handler will be needed with this system. The full-time technician costs $60,000 per year and the material handler costs $52,000 per year.

If the company selects the manual system, it will need four full-time material handlers at a cost of $52,000 each per year. If the manual system is selected, the company will incur additional costs of $0.50 per windshield installed. (Hint: This is the savings referred to in the first paragraph.)

Assume that only one windshield is installed per automobile.

Suppose that the company is going to produce 9,000 windshields per month. How much would the robotic design have to save per unit in order for the company to be indifferent between the two design options?