2C2D SUNSHINE CORPORATION IS CONSIDERING THE PURCHASE OF A NEW MACHIN...
245.
CSO: 2C2d
LOS: 2C2d
Sunshine Corporation is considering the purchase of a new machine for $800,000. The
machine is capable of producing 1.6 million units of product over its useful life. The
manufacturer’s engineering specifications state that the machine-related cost of
producing each unit of product should be $.50. Sunshine’s total anticipated demand over
the asset’s useful life is 1.2 million units. The average cost of materials and labor for
each unit is $.40. In considering whether to buy the new machine, would you
recommend that Sunshine use the manufacturer’s engineering specification of machine-
related unit production cost?
a.
No, the machine-related cost of producing each unit is $2.00.
b.
No, the machine-related cost of producing each unit is $.67.
c.
No, the machine-related cost of producing each unit is $.90.
d.
Yes, the machine-related cost of producing each unit is $.50.