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A manufacturing company is considering the purchase of a new machine that would increase production capacity for one of its high-demand products. Current Situation:
A manufacturing company is considering the purchase of a new machine that would increase production capacity for one of its high-demand products. Current Situation: Production Capacity: 1000 units per month Selling Price per Unit: $150 - Variable Cost per Unit: $50 Fixed Operating Expenses: $20,000 per month Current Investment in Production Equipment: $200,000 Proposal: Purchase a new machine for $50,000 that reduces the variable cost by $10 per unit and increases production capacity by 200 units per month. What is the Current State Throughput by using the TOC definition. b. What prevents the firm from increasing throughput? c. Will the total amount of throughput change if we accept the proposal? d. Will the operating expenses of the firm change if we accept the proposal? e. Will the amount of investment of the firm change if we accept the proposal? What is the real economic effect of the proposal? f. g. Should we accept the proposal? H
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