Question: A company is considering two methods for obtaining a certain part. Method A will involve purchasing a machine for $30,000 with a life of 5

A company is considering two methods for obtaining a certain part. Method A will involve purchasing a machine for $30,000 with a life of 5 years, a $3,000 salvage value, and a fixed annual operating cost of $6,000. Additionally, each part produced by the method will cost $5. Method B will involve purchasing the part from a subcontractor for $35 per part. At an interest rate of 10% per year, determine the number of parts per year required for the two methods to break even. (Enter your answer as a number without the dollar $ sign.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!