Question: Matthew Bailey as manager of Designs by Bailey is upgrading
Matthew Bailey, as manager of Designs by Bailey, is upgrading his CAD software. The high- performance ( HP) software rents for $ 3,000 per month per workstation. The standard- performance ( SP) software rents for $ 2,000 per month per workstation. The productivity figures that he has available suggest that the HP software is faster for his kind of design. Therefore, with the HP software he will need five engineers and with the SP software he will need six. This translates into a variable cost of $ 200 per drawing for the HP system and $ 240 per drawing for the SP system. At his projected volume of 80 drawings per month, which system should he rent?
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