Tribal Systems, Inc., is opening a new plant and has yet todecide on the type of process to employ. A labor-intensiveprocess would cost $10,000 for tools and equipment and $14 for labor and materials per item produced. A more au-tomated process costs $50,000 in plant and equipment but has a labor/material cost of $8 per item produced. A fullyautomated process costs $300,000 for plant and equipmentand $2 per item produced. If process selection were basedsolely on lowest cost, for what range of production wouldeach process be chosen?
Tribal Systems, Inc., is opening a new plant and has yet todecide on the type of process to employ. A labor-intensiveprocess would cost $10,000 for tools and equipment and $14 for labor and materials per item produced. A more au-tomated process costs $50,000 in plant and equipment but has a labor/material cost of $8 per item produced. A fullyautomated process costs $300,000 for plant and equipmentand $2 per item produced. If process selection were basedsolely on lowest cost, for what range of production wouldeach process be chosen?
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
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Question
Tribal Systems, Inc., is opening a new plant and has yet to
decide on the type of process to employ. A labor-intensive
process would cost $10,000 for tools and equipment and
$14 for labor and materials per item produced. A more au-
tomated
has a labor/material cost of $8 per item produced. A fully
automated process costs $300,000 for plant and equipment
and $2 per item produced. If process selection were based
solely on lowest cost, for what range of production would
each process be chosen?
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