Multiple-alternative decision A manufacturer of air conditioning systems plans to in- stall a new coil winding machine in the fall. Several machine tool companies have prepared preliminary design proposals. Each machine has attractive features, and all can produce the quality coils required. Estimated production cost data for the three alternatives are presented below. Variable costs are expressed in terms of cost per 100 feet of coil.

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Die-Master Tool-Town Ready-Tool Variable costs: Direct materials. Direct labor Variable overhead Annual fixed costs: Equipment depreciation $22.00 $23.00 $25.00 12.00 8.00 4.00 8.00 6.00 3.00 $15,000 $25,000 $50,000 Maintenance and insurance 4,000 8,000 15,000