A manufacturing company has the choice of two suppliers to buy a piece of equipment from...

 

Transcribed Image Text:

A manufacturing company has the choice of two suppliers to buy a piece of equipment from to use in its process. Characteristics of these two suppliers and associated costs are tabulated below. The equipment from supplier A costs more to buy and maintain, but it also has more revenue per unit sold. Selling enough units will at some point make it worth the higher cost. How many units per year must the company sell in order to justify using supplier A (i.e. what is the breakeven number of units to sell)? Use an interest rate of 12% per year. Supplier A Supplier B Initial cost $4,000 $3,000 Sale price (revenue per unit) $4 $3 Transportation costs (per $0 $1.25 unit) Annual maintenance cost $1,400 $1,100 Salvage value $800 $700 Useful life of the equipment 5 4 (years) Question 4 Part E: How many units per year must the company sell in order to justify using supplier A? Enter your answer in the form: 12345.67 A manufacturing company has the choice of two suppliers to buy a piece of equipment from to use in its process. Characteristics of these two suppliers and associated costs are tabulated below. The equipment from supplier A costs more to buy and maintain, but it also has more revenue per unit sold. Selling enough units will at some point make it worth the higher cost. How many units per year must the company sell in order to justify using supplier A (i.e. what is the breakeven number of units to sell)? Use an interest rate of 12% per year. Supplier A Supplier B Initial cost $4,000 $3,000 Sale price (revenue per unit) $4 $3 Transportation costs (per $0 $1.25 unit) Annual maintenance cost $1,400 $1,100 Salvage value $800 $700 Useful life of the equipment 5 4 (years) Question 4 Part E: How many units per year must the company sell in order to justify using supplier A? Enter your answer in the form: 12345.67

Answer rating: 100% (QA)

To calculate the breakeven number of units to determine which supplier to choose we need to consider ... View the full answer