Q$2$a$)$ Assume that you are offered a new piece of equipment for $$12,000.$ The equipment

will produce $10,000$ units per year with a margin of $$6\mathrm{.}00$ per unit. Demand for the product

being produced has been $2,000$ units per year. Your current equipment is fully depreciated

and can produce $2,000$ units per year at but at a margin of only $$4\mathrm{.}00$ per unit. Should you

purchase the new equipment? Under what conditions?

b$)$ A manufacturer has identified the options for acquiring a machined part. It can make

the part on numerically controlled lathe for $$150$ per unit $($including materials.$)$ It can

make the part on a standard lathe for $$250$ per unit $($also including materials.$)$ The

manufacturer can acquire a standard lathe for $$10,000.$ It could acquire a numerically

controlled lathe for $$100,000.$ A machining center would cost $$350,000.$ It has also found

that it can purchase the part for $$350$ per unit. Advise the manufacturer as to which option

is best for him and under what conditions?