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9. At MKBK Plastics Inc., an injunction-molded part has been estimated to cost $1.05 a piece ($0.80 for material and $0.25) for labor). Initial tooling
9. At MKBK Plastics Inc., an injunction-molded part has been estimated to cost $1.05 a piece ($0.80 for material and $0.25) for labor). Initial tooling expenditures of $50,000 have been incurred to make 5 million parts over a period of 12 months. After delivering 2 million pieces, a better material was found at a reduced price $0.70 a piece. However, the new material requires some modification to the existing tooling. How much can the company afford to spend on this modification to realize cost savings of at least $100,000 on the contract? Note that, it will delay the delivery of the part and the cost of the delay is estimated to be $150,000
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