Manufacture several lines of pressure washers

Assignment Help Business Economics

Reference no: EM13815754

An industrial firm can manufacture several lines of pressure washers. The demand for a particular component required for a pressure washer is 120,000 per year. The firm has the following two options:

Buy option: A supplier is willing to provide this component at a unit sales price of $35.000, if at least 100,000 units are ordered annually.

Make option: The machine that can be used to manufacture this component costs $2,200,000 now and will have a salvage value of $120,000 after five years. The manufacturing cost per unit including the direct material and labor and the variable and fixed factory overhead is only $30.00. In addition, the annual maintenance cost of the machine is $100,000.

Calculate the unit under each of the above two options and choose the best option. Assume that the firm’s interest rate is 12%, compounded annually.

Reference no: EM13815754

Questions Cloud

What is attention deficit hyperactivity disorder : What is Attention Deficit Hyperactivity Disorder

Initial capital equipment-break even : A city has decided to build a softball complex and the city council has already voted to fund the project at the level of $800,000 (initial capital equipment). The city engineer has collected the following financial information for the complex projec..

Which of belligerents in ww-i possessed a workable strategy : Which of the belligerents in World War I possessed a more workable strategy (set of war aims), the Central Powers or the Allies? Please be sure to support your answer by referencing specific nations in either group.

Research the history of the coroner system : Research the history of the coroner system and the medical examiner system. When and where were the systems introduced to the United States

Manufacture several lines of pressure washers : An industrial firm can manufacture several lines of pressure washers. The demand for a particular component required for a pressure washer is 120,000 per year. Buy option: A supplier is willing to provide this component at a unit sales price of $35.0..

Equal employment opportunity and employee rights : Refer to the Equal Employment Opportunity and Employee Rights Review, for List A and List B.

Describe the stages of the life cycle of the blowfly : Forensic entomology (FE) is the study of insects as it relates to criminal or civil investigations. In criminal cases, it is used to determine postmortem interval

Lists concepts that will be the most useful in your life : Write an essay (500-750 words) that lists four concepts or strategies that you think will be the most useful in your life, either now or in the future.

Brochure for the hrm department : Create the text information for the brochure for the HRM department at Hancock Manufacturing. Submit your text in a Microsoft® Word document. Note that a graphic artist is responsible for the graphic design. Your Learning Team must write only the ..

User Account

All Pages