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A company is considering two methods for obtaining a certain part. Method A will involve purchasing...

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Mechanical Engineering

A company is considering two methods for obtaining a certainpart. Method A will involve purchasing a machine for $40,000 with alife of 5 years, a $2,400 salvage value, and a fixed annualoperating cost of $8,000. Additionally, each part produced by themethod will cost $8. Method B will involve purchasing the part froma subcontractor for $30 per part. At an interest rate of 10% peryear, determine the number of parts per year required for the twomethods to break even. (Enter your answer as a number without thedollar $ sign.)

Answer & Explanation Solved by verified expert
4.0 Ratings (483 Votes)
Soln Information from question Cost of Machine investment 40000 dollars Life of machine n 5 years Salvage value after 5 years 2400 dollars Fixed annual operating cost 8000 dollars Variable cost of production 8 dollars per part Sales price of product 30 dollars per part Interest rate    See Answer
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