Provide Working Notes

Comprehensive Case Piltdown Plating Piltdown Plating has been in operation for 20 years and applies metal coatings, such as chromium or silver, to metal items by electro-chemical processes. Each job is unique, and the company prides itself on the skill of the workers and the quality of the final product. The production machin- ery has been depreciated to nil value, but it is still functional. There are 20 workers: 5 operate the machines that remove the old coatings; 2 work on the degreasing tanks; 5 operate the plating machines: and 3 are in the raw material store. The remaining 5 are less skilled and do final cleaning and packing. Results for a recent month were as follows: Sales revenue $ 250,000 Raw materials $ 100,000 Production wages 50,000 Production salaries 10,000 Administrative salaries 5,000 Employee benefits and on-costs (20% of total wage bill) 13,000 Rent 10,000 Utilities 5,000 Repairs and renewals 2,000 Marketing and advertising 5,000 Factory depreciation nil Total cost S 200,000 Operating profit $50,000 The production manager has been told by the owners that the com- pany is not profitable enough, so he has been investigating some ways of improving the return on investment He has identified a new computerized cleaning machine that will elimi- nate the need for five of his workers and save $12,500 in direct wage costs every month. This machine can be rented for $5,000 per month. It will also require additional power, so utility costs will go up by 10%. Required Discuss the effect of renting the new machine on the following: Profitability The break-even point and the risk of the company Human resource management