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ABC Company has two machines, each machine working separately, but theyproduce the same parts. The variable and fixed costs of those two machines aresummarized in

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ABC Company has two machines, each machine working separately, but theyproduce the same parts. The variable and fixed costs of those two machines aresummarized in the following table. Machine 1 (M1) cycle time is 1 part/ 3hours, and Machine 2 (M2) cycle time is 1 part/ 1 hour. The manager wants to invest in a new machine (M3), the new machine'sfixed cost is $15,000, the variable cost is $400 / 10 parts, and it needs two operators;its cycle time is one part / 1 hour. If he decided to buy the new machine, thepart price would increase by 30% Cost Fixed Cost Variable Cost (per 10 parts) Number of operators (50/hour) Part Price M1 M2 $20,000 $10,000 $500 $300 2 1 $500 1 Contribution margin per unit before * buying machine 3 2 Contribution margin per unit after * buying machine 3 3 Breakeven point unit before buying * machine 3

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