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What is the point of indifference for the two machines

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Reference no: EM132813518

You have to decide which of two machine- Automatic or Manual, to purchase. The information about the machines is the following:

Automatic Machine- Fixed costs (Interest, insurance, maintenance, ctc.) total $100,000. The labour and material costs for manufacturing a shaft, are $10.2/Unit and $15.6/Unit, respectively.

Manual Machine- Fixed costs (lnterest, insurance, maintenance, etc.) total $70,000. The labour and material costs for manufacturing the shaft are $16.0/Unit and $18.5/Unit.

-What is the point of indifference (break-even-point) for the two machines?

-If the demand for the 500mm Block is 3800 units/year, which machine should you buy? Why?

-Engineering Services Inc. offers to sell you the block for S65.0/Unit for any quantity you require.

-For what level of demand would you rather buy the block, instead of purchasing any of the above machines and manufacture the shaft in house?

-Sum-up your choice for alternatives, according to the demand quantity. List the quantity range for cach alternative (Buy, Purchase Manual, Purchase Automatic)

Reference no: EM132813518

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