Question

This Testopis pos This Question: 1 pt 1 of 6 (0 complete) em Keith Whittingham, as manager of Designs by Whittingham, is upgrading his CAD software. The high performance (MP) 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 valable suggest that the 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 alates who a viable cost of $200 per drawing for the HP system and $240 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 Koth

Answer 1

This problem will be solved by finding changeover level of output and on that basis, type of software will be selected.

Let, changeover volume of output (No. of drawings) = X

Then at changeover volume of output,

Total cost of HP software = total cost of SP software

3000 + 200*X = 2000 + 240*X

X = (3000-2000)/(240-200)

X = 25 unit of drawings

Changeover volume of 25 drawings means, for any requirement of more than 25 drawings, HP software should be selected.

It can be proven by following calculations:

At 80 drawings,

Total cost using HP software = 3000 + 200*80 = $19000

Total cost using SP software = 2000 + 240*80 = $21200

So, use of HP software is cheaper and best option for 80 drawings per month.

Hence , for 80 drawings per month, it is renting of HP software that is the best option