BUS 370 FA11 - Homework #2 – Due 10/25/11
Use the following information for questions 8.1 – 8.3
You want to rival Michael Dell and make billions of dollars manufacturing personal
You research the cost of 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
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:
Variable Cost (per Unit)
What would the cost of Option 1 be if you sold 8,000 computers?
What would the cost of Option 2 be if you sold 8,000 computers?
8.1.c. Which option would you choose?
What is the cost of Option 1 if you sold 12,000 computers?