Guardian is a national manufacturing company of home health care appliances. It is faced with...
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Guardian is a national manufacturing company of home health care appliances. It is faced with a make-or-buy decision A newly engineered lift can be installed in a car trunk to raise and lower a wheel-chair The steel arm of the lift can be purchased internationally for $3.50 per unit or made in-house. If manufactured on site, two machines will be required Machine A is estimated to cost $18000 have a life of 6 years and have a salvage value of $2000. Machine B is estimated cost $12,000 have a life of 4 years, and a $-500 salvage value carry away cost Machine A will require an overhaul after 3 years costing $3000 The annual operating cost of Machine A is expected to be $6000 per year and for Machine B is $5000 per year. A total of four operators will be required for the two machines at a rate of $12.50 per hour per operator The material cost is .22/unit In a normal 8-hour period the operators and two machines can produce parts sufficient to manufacture 1000 units. Use a MARR of 12% per year How many units would need to be produced to justify purchasing the capital equipment to produce these in-house
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