Installed a new machine to make particular type of part

Assignment Help Business Economics

Reference no: EM13861948

Suppose you own a specialized auto parts manufacturer. You purchase and have installed a new machine to make a particular type of part. The price of the machine plus installation is $300,000. Once the machine is purchased and installed it has no resale value, but it does not wear out. Other costs of making the parts are $200 per unit.

Suppose you are able to make and sell 1000 units at $225 each. Let the market rate of interest be 10%.

a) If you have already purchased the machine, should you go ahead and make and sell the 1000 units or should you close your operation?

b) If you have not yet purchased the machine and anticipate selling only 1000 at a price of $225, should purchase the machine and produce?

c) Is there a difference in your answers to (a) and (b)? Explain.

Reference no: EM13861948

Questions Cloud

Legal services firm processes routine documents for law firm : A legal services firm processes routine documents for law firm clients in Ohio and Kentucky. Since Indiana law and procedures are similar, it is considering adding clients from that state. In making this decision, the company “allocates” one-third of..

Create a use case graphic rendering that shows all actors : Using Microsoft Visio or an open source alternative such as Dia, create a use case graphic rendering that shows all actors and all use cases for the RMO CSMS marketing subsystem.Note:The graphically depicted solution is not included in the required p..

Total variable costs : Consider a firm with the following total variable costs (TVC). If the firm has already purchased the equipment, answer the following: (i) if the firm chooses to operate, what is its best possible output?

Task is to design a display with three leds : Your task is to design a display with three LEDs that has the following four modes of operations: Mode 1: Left to right operation 1 - left LED switches ON and then switches OFF, followed by the middle LED, and then the right LED. This sequence repea..

Installed a new machine to make particular type of part : Suppose you own a specialized auto parts manufacturer. You purchase and have installed a new machine to make a particular type of part. The price of the machine plus installation is $300,000. If you have already purchased the machine, should you go a..

Gui library to convert celsius to fahrenheit : Write a program in Java using Swing GUI library to convert Celsius to Fahrenheit. If the input is in Celsius, the program can output equivalent Fahrenheit. Both the input and output should use Swing GUI program. Both the input and output should use S..

Viewing system information : Viewing system information (Screenshot and written response required)View the system information (i.e., operating system, processor, memory) of the computer. (Help: From the Control Panel, select System and Security, and then select System; This navi..

What is shops average cost without taking the new order : Consider a copy shop with annualized fixed costs of $1000 and variable cost of $0.03 per page. The shop presently has orders for 100,000 copies at a price of $0.05 per page. What is the shop’s average cost (AC) without taking the new order? Is it les..

User Account

All Pages