The Following Information Relates to the Purchase of New Machine

question 4

Essay

The following information relates to the purchase of new machine being considered. The new machine would enable the company to make 13,500 units per year.The current capacity of 12,000 is based on the maximum number of units that the old machine can produce.The company has had to turn down orders in the past few years due to this limit on capacity and estimates that it can sell as many of the product as it can produce.The sales price per unit of the product is $34.50.Determine the relevant data.Pose one addition consideration regarding this decision.

---

Definitions:

Complementary Resources

Productive inputs that are used jointly with other inputs in the production process; resources for which a decrease in the price of one leads to an increase in the demand for the other.

Backflows

In a systems context, refers to the reverse flow of a liquid, gas, or other substance, counter to the intended or normal direction, which can create issues such as contamination.

Skill Transferability

The ease with which people can shift their work talents from one job, region, or country to another job, region, or country.

Net Benefits

The total positive outcomes or advantages derived from a particular action, subtracting any associated costs or negative effects.