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Williams Auto has a machine that installs tires. The machine is now in need of repair. The machine originally cost $11,900 and the repair will
Williams Auto has a machine that installs tires. The machine is now in need of repair. The machine originally cost $11,900 and the repair will cost $2,900, but the machine will then last two years. The variable (labor) cost of operating the machine is $0.75 per tire. Instead of repairing the old machine, Williams could buy a new machine at a cost of $6,900 that would also last two years, the labor cost per tire would be reduced to $0.35 per tire. Williams expects to install 11,900 tires in the next two years. a. Determine the total (two-year) cost for both repairing and replacing the machine. Total cost to repair Total cost to replace b. Should Williams repair or replace the machine? Repair Replace
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