Question
A certain machining job for a machine shop in Manila can be done on 12 existing lathes, on which the initial cost has been amortized,
A certain machining job for a machine shop in Manila can be done on 12 existing lathes, on which the initial cost has been amortized, if P1200.00 is spent on each lathe for special tool equipment. It is estimated that 50 min. time will be required per piece machined with labor at P120.00 per hour. The job could also be done on automatic machine which will have to be purchased for P36400.00 each, including tools. Time per piece on these machines will be 8 minutes and labor will be charged at the rate of P120.00 per hour total labor charge for whatever number of machines is purchased up to 10 because one man can tend a number of machines. What size of order for such pieces would justify purchasing automatic machines, assuming the cost of the special tools or the automatic machines to be written off on the job?
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