Maximum amount you will pay for the new process

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Q. A manufacturer makes $7900000 memory chips every year. Every chip takes 0.4 minutes of direct labor at the rate 0f $8 every hour. The overhead costs are estimated at $11 every direct labor hour. Anew process will reduce the unit production time by 0.01 minutes. If the overhead cost will be reduced by $5.50 for every hour by which total direct hours are reduced, illustrate what is the maximum amount you will pay for the new process? Suppose that the new process must pay for itself by the end of the first year.

Reference no: EM1311697

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