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Calculate the profit for each option

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Question - Mrs Green has approached you and would like to buy 10,000 widgets in a one-off special order. She is willing to pay $15 per widget. As Mrs Green has superior taste she would like each widget to be branded with the Green Farm's Family Crest. You have done your research and have found two options:

1) An outside supplier who can provide the branding for $1 per widget.

2) Lease a new machine solely for branding the widgets. If this option was taken, depreciation on the lease machine would be $4,000 for the year and lease cost would be $3,000.

Considering all of the facts given, calculate the profit for each option and recommend which Mr Brown should take.

Reference no: EM132563038

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