Question: A proposed automatic machine is to be used exclusively to produce one type of work part. The machine has a first cost of $50,000 and

A proposed automatic machine is to be used

A proposed automatic machine is to be used exclusively to produce one type of work part. The machine has a first cost of $50,000 and its expected service life is 3 years with a salvage value of $20,000 at the end of the 3 years. The machine will be operated 4000 h/year (two shifts) at $8.00/h (labour, power, maintenance, etc). Its production rate is 10 units/h. Excluding raw material costs, compute the production cost per unit using a rate of return of 25%. Answer should be $1.309 per piece

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