Question

High-performance or standard-performance?

X Problem 7.8 :s Question Help Matthew Bailey, as manager of Designs by Bailey, is upgrading his CAD software. The high-performance (HP) software rents for $3,000 per month per workstation. The standard-performance (SP) software rents for $2,000 per month per workstation. The productivity figures that he has available suggest that the HP software is faster for his kind of design. Therefore, with the HP software he will need 5 engineers and with the SP software he will need 6. This translates into a variable cost of $200 per drawing for the HP system and $250 per drawing for the SP system. If it is projected that the volume will be 80 drawings per month, then renting software is the best option available to Matthew.

Answer 1

Expense = Fixed costs + Variable Costs

For High Performance

Expense = 3000 + 200*80

= $19000

For Standard Performance

Expense = 2000 + 250*80

= $22000

If the projected volume is 80 Drawings per month, then renting High Performance software is the best option.