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

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

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