worthington machining must decide whether to purchase process a with specialized metal folding equipment…

worthington machining must decide whether to purchase process a with specialized metal folding equipment needing two employees to operate it or process b with general - purpose folding equipment requiring four employees. process a requires a fixed cost of $1,430,000 and a variable cost of $14.64 per metal panel. process b requires a fixed cost of $880,000 and a variable cost of $20.14 per metal panel. process a is more automated than process b. predicted demand for the next year is 150,000. what do you recommend if worthington machining can buy folded metal panels of identical size at a price of $26.50 per panel? round your answers to the nearest dollar. total cost of process a: $ total cost of process b: $ total cost of purchase: $ so, select - is recommended.

worthington machining must decide whether to purchase process a with specialized metal folding equipment needing two employees to operate it or process b with general - purpose folding equipment requiring four employees. process a requires a fixed cost of $1,430,000 and a variable cost of $14.64 per metal panel. process b requires a fixed cost of $880,000 and a variable cost of $20.14 per metal panel. process a is more automated than process b. predicted demand for the next year is 150,000. what do you recommend if worthington machining can buy folded metal panels of identical size at a price of $26.50 per panel? round your answers to the nearest dollar. total cost of process a: $ total cost of process b: $ total cost of purchase: $ so, select - is recommended.

Answer

Explanation:

Step1: Calculate total cost of Process A

The total - cost formula is $C = FC+VC\times Q$, where $FC$ is the fixed cost, $VC$ is the variable cost per unit, and $Q$ is the quantity. For Process A, $FC = 1430000$, $VC = 14.64$, and $Q = 150000$. So, $C_A=1430000 + 14.64\times150000$. $C_A=1430000+2196000=3626000$.

Step2: Calculate total cost of Process B

For Process B, assume the fixed cost $FC = 880000$ and variable cost per unit $VC$ (not given in your text, assume it's a value). Let's assume the variable cost per unit for Process B is $VC_B$. If we assume $VC_B$ is a value, and $Q = 150000$, then $C_B=880000+VC_B\times150000$. Since the variable - cost per unit for Process B is not clear in your text, if we assume it's $20$ (a placeholder value for illustration purposes), then $C_B=880000 + 20\times150000=880000+3000000 = 3880000$.

Step3: Calculate total cost of purchase

The cost of purchasing the panels at a price of $26.50$ per panel for $Q = 150000$ is $C_p=26.50\times150000=3975000$.

Answer:

Total cost of Process A: $$3626000$ Total cost of Process B: $$3880000$ (assuming variable cost per unit of $$20$) Total cost of purchase: $$3975000$ So, Process A is recommended.