Sunshine Corporation is considering the purchase of a new machine for $800,000. The machine is capable of producing 1.6 million units of product over its useful life. The manufacturer?s engineering specifications state that the machine-related cost of producing each unit of product should be $0.50. Sunshine?s total anticipated demand over the asset?s useful life is 1.2 million units. The average cost of materials and labor for each unit is $.40. In considering whether to buy the new machine, would you recommend that Sunshine use the manufacturer?s engineering specification of machine-related unit production cost?

No, the machine-related cost of producing each unit is $2.00.
No, the machine-related cost of producing each unit is $.67.
No, the machine-related cost of producing each unit is $.90.
Yes, the machine-related cost of producing each unit is $.50.

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