Assignment:
The break-even point is to be determined for two production methods, one a manual method and the other automated. The manual method requires two workers at $9.00/hr each Together, they produce at a rate of 36 units/hr. The automated method has an initial cost of $125.000, a 4-year service Iife, no salvage value, and annual maintenance costs = $3000. No labor (except for maintenance) is required to operate the machine, but the power required to run the machine is 50 kW (when running). Cost of electric power is $0.05/kWh. If the production rate for the automated machine is 100 units/hr, determine the break-even point for the two methods, using a rate of return = 25%.
Provide complete and step by step solution for the question and show calculations and use formulas.