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a) all 4 products. Machines operate 10 hours a day, 300 days a year. Calculate how many of each type of machine would be required to satisfy the demand for b) Assume that only purchasing costs are being considered. Which machine would have the lowest total cost? c) Consider this additional information: The machines differ in terms of hourly operating costs: • The A machines have an hourly operating cost of $7 each, • B machines have an hourly operating cost of $12 each, and C machines have an hourly operating cost of $10 each. Assume that the machines will be used only for one year. Which machine will have the lowest total cost (purchasing cost + operating cost)?

a) all 4 products. Machines operate 10 hours a day, 300 days a year. Calculate how many of each type of machine would be required to satisfy the demand for b) Assume that only purchasing costs are being considered. Which machine would have the lowest total cost? c) Consider this additional information: The machines differ in terms of hourly operating costs: • The A machines have an hourly operating cost of $7 each, • B machines have an hourly operating cost of $12 each, and C machines have an hourly operating cost of $10 each. Assume that the machines will be used only for one year. Which machine will have the lowest total cost (purchasing cost + operating cost)?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter13: Lean Manufacturing And Activity Analysis
Section: Chapter Questions
Problem 5E: Reduce setup time Vernon Inc. has analyzed the setup time on its computer-controlled lathe. The...
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Question 5 A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows: Machine Cost A 75000 45000 55000 Product forecasts and processing times on the machines are as follows: Processing Time Per Unit (minutes) Annual Machine Machine Machine Product Demand A B C 20000 9. 2 25000 4 5 10 8000 10 6. 4 46000 2 8 9. a) all 4 products. Machines operate 10 hours a day, 300 days a year. Calculate how many of each type of machine would be required to satisfy the demand for b) Assume that only purchasing costs are being considered. Which machine would have the lowest total cost? c) Consider this additional information: The machines differ in terms of hourly operating costs: The A machines have an hourly operating cost of $7 each, B machines have an hourly operating cost of $12 each, and C machines have an hourly operating cost of $10 each. Assume that the machines will be used only for one year. Which machine will have the lowest total cost (purchasing cost + operating cost)?
Transcribed Image Text:Question 5 A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows: Machine Cost A 75000 45000 55000 Product forecasts and processing times on the machines are as follows: Processing Time Per Unit (minutes) Annual Machine Machine Machine Product Demand A B C 20000 9. 2 25000 4 5 10 8000 10 6. 4 46000 2 8 9. a) all 4 products. Machines operate 10 hours a day, 300 days a year. Calculate how many of each type of machine would be required to satisfy the demand for b) Assume that only purchasing costs are being considered. Which machine would have the lowest total cost? c) Consider this additional information: The machines differ in terms of hourly operating costs: The A machines have an hourly operating cost of $7 each, B machines have an hourly operating cost of $12 each, and C machines have an hourly operating cost of $10 each. Assume that the machines will be used only for one year. Which machine will have the lowest total cost (purchasing cost + operating cost)?
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