Guthridge Soap Corporation is evaluating a new soap cutting machine that could eliminate some direct labor costs.

Question:

Guthridge Soap is evaluating a new soap cutting machine that could eliminate some direct labor costs. The machine would cost $900,000 per year and would cost $0.10 per bar to cut the soap. Currently, Guthridge uses direct labor to cut the soap into bars, which costs $1 per bar. The company currently produces 500,000 bars of soap per year. Should it buy the machine?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...