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