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What is the most Tyler would be willing to pay

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Question - Tyler, Inc. sells 12,800 units of its product per year. The selling price per unit is $108 and the variable cost per unit is $83. The company's manager is considering to lease a new machine for $208,000 per year, which allows them to make modifications to the products. To complete the modifications, the variable cost per unit will increase by $16.00, but the manager is thinking to sell the modified products for $138 per unit.

a-1. Should Tyler modify the units or sell them as is?

Sell as is

Sell with modifications

a-2. How much will the decision affect profit? (Use absolute value.)

b. What is the least Tyler could charge for the modified units to make it worthwhile to modify them?

c. The leasing company is willing to negotiate the price of the machine lease. What is the most Tyler would be willing to pay to lease the machine if they plan to charge $138 for the modified units?

Reference no: EM132737922

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