Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. ABC Manufacturing Company is looking at two investment options to reduce costs to manufacture a new computer called Tech-20. Alternative 1 is to stay
3. ABC Manufacturing Company is looking at two investment options to reduce costs to manufacture a new computer called Tech-20. Alternative 1 is to stay in their current location and purchase a new machine that lowers the cost per unit through efficiency. Alternative 2 is to move the production facility to Chile that lowers cost per unit due to lower labor costs. Analyze the following information to make a decision. \begin{tabular}{|l|r|r|} \hline KEY DATA SUMMARY & Alternative 1-Buy Machine & Alternative 2-Move to Chile \\ \hline One-time cost & & \\ \hline Annual Changes & & $0 \\ \hline Additional Revenue & $0 & $62,500 \\ \hline Cost of Goods Savings & $25,000 & $0 \\ \hline Cost Increase (loan) & $0 & $62,500 \\ \hline Total Annual Savings & $25,000 & \\ \hline \end{tabular} 3b. Complete a Breakeven Analysis by calculating the Breakeven Volume and Breakeven investment. Include the appropriate formulas for each calculation. (all the highlighted boxes should be filled) 3c, Based on your analysis, which investment would you suggest ABC Manufacturing Company to choose? Why? Answer: 3d. In your opinion, why do you think ROI and breakeven analysis are important when choosing between two investments rather than just looking at total savings minus total costs. Answer: ABC Manufacturing take into account when making this investment decision? Give your reasoning
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started