Jane Persico, facility engineer at the El Paso plant of Computer Products Corporation (CPC), is studying a process selection decision at the plant. A new printer is to be manufactured and she must decide whether the printer will be auto-assembled or manually assembled. The decision is complicated by the fact that annual production volume is expected to increase by almost 50% over three years. Jane has developed these estimates for two alternatives for the printer assembly process:

a.
Which production process would be the least-cost alternative in Years 1, 2, and 3?
b.

How much would the variable cost per unit have to be in Year 2 for the auto-assembly process to justify the additional annual fixed cost for the auto-assembly process over the manual assembly process?

Question

Jane Persico, facility engineer at the El Paso plant of Computer Products Corporation (CPC), is studying a process selection decision at the plant. A new printer is to be manufactured and she must decide whether the printer will be auto-assembled or manually assembled. The decision is complicated by the fact that annual production volume is expected to increase by almost 50% over three years. Jane has developed these estimates for two alternatives for the printer assembly process:​
​  ​ 
a.
Which production process would be the least-cost alternative in Years 1, 2, and 3?
b.
​
How much would the variable cost per unit have to be in Year 2 for the auto-assembly process to justify the additional annual fixed cost for the auto-assembly process over the manual assembly process?
​

Quizplus · Accepted Answer

The Answer of Jane Persico, facility engineer at the El Paso plant of Computer Products Corporation (CPC), is studying a process selection decision at the plant. A new printer is to be manufactured and she must decide whether the printer will be auto-assembled or manually assembled. The decision is complicated by the fact that annual production volume is expected to increase by almost 50% over three years. Jane has developed these estimates for two alternatives for the printer assembly process:​
​  ​ 
a.
Which production process would be the least-cost alternative in Years 1, 2, and 3?
b.
​
How much would the variable cost per unit have to be in Year 2 for the auto-assembly process to justify the additional annual fixed cost for the auto-assembly process over the manual assembly process?
​

Jane Persico, Facility Engineer at the El Paso Plant of Computer