Question

After thorough analysis, what is the most reasonable estimate for the total cost of the recently purchased machinery?

1) 40,800
2) Cannot be determined
3) Not enough information provided
4) Other

Answer 1

To estimate the total cost of machinery with the increased machine cost of $55 and constant labor cost at $40, the total cost for each technology must be recalculated. The firm should select the technology that offers the lowest total cost after these adjustments. Specific costs cannot be provided without knowing the number of machines for each technology.

Step-by-step explanation:

Given the scenario where the cost of machines has increased to $55 from $80, and the cost of labor remains at $40, we need to adjust the total cost calculations for each technology.

• For Technology 1, the cost will now be $720 in labor + ($55 × number of machines).
• For Technology 2, the cost will now be $960 in labor + ($55 × number of machines).
• For Technology 3, the cost will now be $1,200 in labor + ($55 × number of machines).

The firm should choose the technology with the lowest total cost after these adjustments. To make a specific recommendation, we would need more information about the number of machines used in each technology.