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A company is planning to manufacture a component in its own facility, A new machine needs to be purchased now for this, which will cost
A company is planning to manufacture a component in its own facility, A new machine needs to be purchased now for this, which will cost $ 100,000. This machine has a salvage value of $ 20,000 at the end of 5 years which is its useful life. The company plans to manufacture 10,000 units per one year. The unit production costs of the products are as follows: Direct Material $ 8.00 Direct Labor $ 4.00 Total Overhead $ 10.00 This does not include the machine cost per unit which is based on the cost of the machine and its salvage value. As an alternative, this company can buy this component from an outside supplier at a cost of $ 30.00 per unit (purchase price per unit). What is the savings per unit, if the company manufactures this component in its own facility ? That is (Purchase price per unit - Total production cost per unit) Assume that the company's MARR Is 10 %. Please keep two digits after the decimal point for all dollar values Please choose one of the following values 5.69 1971 150
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