Chapter $7$: Manufacturing Process

The ABC Corporation is considering introducing a new product, which will require

buying new equipment for a monthly payment of $$5,000.$ Each unit produced will cost

$$20\mathrm{.}00.$ ABC is expecting to sell $20,000$ units monthly. Suppose that ABC would like to

realize a monthly profit of $$50,000.$ What's the selling price that ABC should charge per

unit to achieve the targeted profit?

You are hired as a consultant to decide if your client should purchase a new, highly specialized,

piece of equipment. The product to be produced by this equipment is forecast to have a total

worldwide demand of $15,000$ units over the entire product life. The initial investment to acquire

and install the equipment is $$256,000.$ The variable cost to produce each unit will be $$10$ and the

selling price for the finished product will be $$30.$

If the expected demand of $15,000$ units, should you invest in the new machine?