A manager of Paris Manufacturing that produces computer hard drives is planning to lease a new automated inspection system. The manager believes the new system will be more accurate than the current manual inspection process. The firm has had problems with hard drive defects in the past and the automated system should help catch these defects before the drives are shipped to the final assembly manufacturer. The relevant information follows.

Option A: Current Manual Inspection System Annual fixed cost = $45,000 Inspection variable cost per unit = $15 per unit Option B: New Automated Inspection System Annual fixed cost = $165,000 Inspection variable cost per unit = $0.55 per unit

a. Suppose annual demand is 8,000 units. Use the Excel template Break-Even to determine whether or not the firm should lease the new inspection system?

b. Use the Excel Goal Seek tool to find the breakeven quantity.