Case study Annual operating costs of packaging Department of a manufacturing entity and who does a job manually as follows: - Production capacity of 200,000 annually. - Unit cost SR 20 (SR 10 direct labor). - Indirect labor cost SR 25,000 and other indirect industrial costs SR 75,000. The company received offer to become automatically by add packaging machine produces 350,000 unit annually and reduce the cost per unit to SR 7. The machine costs SR 190,000. Also indirect industrial costs will increase of replacement and maintenance so that the unit cost will become SR 13 Where the annual cost of operating the new machine as follows: Direct labor cost (350,000 unit) SR 100,000 Indirect labor cost SR 40,000 Other indirect industrial costs SR 60,000 total operating cost SR 200,000 Required: Advising the management to continue manually or shift to automatically production? Annual operating costs of packaging Department of a manufacturing entity and who does a job manually as follows: - Production capacity of 200,000 annually. - Unit cost SR 20 (SR 10 direct labor). Indirect labor cost SR 25,000 and other indirect industrial costs SR 75,000. The company received offer to become automatically by add packaging machine produces 350,000 unit annually and reduce the cost per unit to SR 7. The machine costs SR 190,000. Also indirect industrial costs will increase of replacement and maintenance so that the unit cost will become SR 13 Where the annual cost of operating the new machine as follows: Direct labor cost (350,000 unit) SR 100,000 Indirect labor cost SR 40,000 Other indirect industrial costs SR 60,000 total operating cost SR 200,000 Required: Advising the management to continue manually or shift to automatically production