Homework 3 SP09

Homework 3 SP09 - Homework #3 Due 3/12/09 Chapter 8 Use the...

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Homework #3 – Due 3/12/09 Chapter 8 Use the following information for questions 1-3 You want to rival Michael Dell and make billions of dollars producing personal computers. You look into buying equipment to assemble computers and find that there are two options. Option 1 is more automated so it costs more up front, but it takes less time (labor hours) to assemble each computer, resulting in a lower variable cost. Option 2 costs less up front, but takes more time to assemble each computer, resulting in a higher variable cost. The basic information is below: Fixed Cost Variable Cost (per Unit) Option 1 $250,000 $200 Option 2 $100,000 $500 1. What would the cost of each option be if you sold 300 computers? Which option would you choose? What would the cost of each option be if you sold 800 computers? Which option would you choose? What is the indifference point (determine the number of computers where the cost of the two Options is equal)?
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2. You are really not sure of how many computers you can sell, so you decide to assign
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Homework 3 SP09 - Homework #3 Due 3/12/09 Chapter 8 Use the...

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