Rex Carr owns a junkyard which processes used cars into scrap metal. In the long-run Rex can use two methods to destroy cars. The first involves purchasing a hydraulic car smasher which costs $200 a year to own and then spending $1 for every car smashed. The second method involves purchasing a hammer that will last one year and costs $40, and paying his brother Otto Carr to destroy the cars at a cost of $5 each. What is the minimum number of cars processed per year for which Rex should be willing to purchase the hydraulic smasher?

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Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.