Concept explainers
Nagle Electric. Inc., of Lincoln, Nebraska, must replace a robotic Mig welder and is evaluating two alternatives. Machine A has a fixed cost for the first year of $75,000 and a variable cost of $16, with a capacity of 18,000 units per year. Machine B is slower, with a speed of one-half of A’s, but the fixed cost is only $60,000. The variable cost will be higher, at $20 per unit. Each unit is expected to sell for $28.
a) What is the crossover point (point of indifference) in units for the two machines?
b) What is the range of units for which machine A is preferable?
c) What is the range of units for which machine B is preferable?
Want to see the full answer?
Check out a sample textbook solutionChapter 7 Solutions
Pearson eText Principles of Operations Management: Sustainability and Supply Chain Management -- Instant Access (Pearson+)
- Nagle Electric, Inc., of Lincoln, Nebraska, must replace a robotic Mig welder and is evaluating two alternatives. Machine A has a fixed cost for the first year of $77,00 and a variable cost of $12,with a capacity of 12,000 units per year. Machine B is slower, with a speed of one-half of A's, but the fixed cost is only $65,000. The variable cost will be higher, at $17 per unit. Each unit is expected to sell for $27. a) What is the crossover point (point of indifference) for the two machines?_______ The crossover point for the two machines is _________units.arrow_forwardI need the answer of question attached. Thanks!arrow_forwardDr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $150,000, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $2,980 per year in additional revenue, with variable costs estimated at $1,030 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 215 patients annually. How many patients would have to be added for the new process to break even? (Enter your response rounded to the nearest whole number.)arrow_forward
- Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $150,000, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $3,000 per year in additional revenue, with variable costs estimated at $1,000 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 200 patients annually. How many patients would have to be added for the new process to break even?arrow_forwardDr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $147,000, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $2,970 per year in additional revenue, with variable costs estimated at $970 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 190 patients annually. How many patients would have to be added for the new process to break even? patients. (Enter your response rounded to the nearest whole number.) The break-even volume isarrow_forwardDr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $149,000, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $3,040 per year in additional revenue, with variable costs estimated at $1,030 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 205 patients annually. How many patients would have to be added for the new process to break even? Part 2 The break-even volume is enter your response here patients. (Enter your response rounded to the nearest whole number.)arrow_forward
- 2) - AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers. a) You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment = $345,000; market value at end of year six = $120,000; annual revenues = $120,000; annual expenses = $8,000; equipment life = 6 years; effective income tax rate = 50%; and after-tax MARR = 9% per year. MACRS depreciation will be used with a five-year recovery period. b) Compute the PW of the equipment's ATCFS. Is your answer in Part (a) the same as your answer in Part (b)?arrow_forwardThe Mach 10 is a one-person sailboat manufactured by Creative Leisure. The final assembly plant is in Cupertino, California. The assembly area is available for production of the Mach 10 for 200 minutes per day. (The rest of the time it is busy making other products.) The daily demand is 56 boats. Given the following information: Task A B C D EFGH - Performance Time (mins) 1 2 2 1 2 1 1 2 2 Predecessors A A C D, E, F B G, H a) The correct precedence relationship with one of the possible assignment of tasks to workstations is shown in Fig. 2 b) The operating efficiency of the assembly line with 5 workstations shown in the figure chosen above = % (enter your response as a percentage rounded to one decimal place). Fig. 1 Fig. 2 Fig. 3 B B B H D F F Q G Qarrow_forwardA small firm intends to increase the capacity of a bottleneck operation by adding a new machine.Two alternatives, A and B, have been identified, and the associated costs and revenues have beenestimated. Annual fixed costs would be $40,000 for A and $30,000 for B; variable costs per unitwould be $10 for A and $11 for B; and revenue per unit would be $15.c. If expected annual demand is 12,000 units, which alternative would yield the higher profit?arrow_forward
- Input Area Cost Per Hour $1500.00 Outage Duration (hours) 3 Output Area Total Cost for Outage $4500.00 One-Variable Data Table: Cost Outage Impact Analysis Duration (hr) (Cost) 1 $1500.00 1.5 $2250.00 2 $3000.00 2.5 $3750.00 3 $4500.00 3.5 $5250.00 4 $6000.00 4.5 $6750.00 5 $7500.00 Given the data above Which What If Analysis tool is the worksheet using? Provide a description of the What If Analysis tool and why it was used in the worksheet. Interpret what the data means. Discuss what it means for the business.arrow_forwardWhich of the following are components of the compensation package for members of camera/drone PATS? Weekly salary, the cost of a PAT member's fringe benefits package, weekly bonuses for meeting or beating the PAT's weekly assembly quota, overtime pay, and a monthly allowance for living expenses the daily wage paid to each PAT member, the costs of company-paid fringe benefits, a bonus of $4.00 per camera/drone assembled by each camera/drone PAT (which is subject to change), and a weekly allowance for living costs The dollar-cost of a PAT member's fringe benefit package, assembly quality incentives ($ per unit assembled divided equally among PAT members), year-end bonus for perfect attendance, and annual base wage Monthly salary, the cost of a PAT's fringe benefits package, year-end awards of 10 shares of common stock for perfect attendance, weekly bonuses for meeting or beating the PAT's weekly assembly quota, and a monthly allowance for living expenses O Annual base wage, assembly…arrow_forwardPS.55 Four Corners is an IBC company that sells delicious Navajo tacos in the Crossroads Food Court. Part of their success can be attributed to the freshly fried Indian bread that is used not only for the tacos, but also for dessert items. As demand grows the fry-bread process is becoming a bottleneck. Operations management for the company is looking at two different process options to replace the highly manual process currently being used. Option 1 (medium automation) would cost $190 to implement whereas Option 2 (high automation) would cost $450. With Option 1 the variable cost per fry bread produced would be $0.23. The variable cost for Option 2 would be $0.11 per fry bread. At what volume (demand) of fry breads is the cost for the two options the same? (Display your answer to two decimal places.) What is the total cost for either option at this break-even volume (answered in the last question)? (Display your answer to two decimal places.)arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.