Question: Your printed circuit factory has two different wave soldering machines that can make a custom circuit board for an important customer.
Machine A makes 100 boards per hour in a 16-hour production day Raw material costs $8 per board, and there is no scrap of any boards during production. The variable overhead rate to use Machine A is $200 per hour. The boards are sold for a price of $30 each. Machine B makes 120 boards per hour in a 16-hour production day. Raw material costs $6 per board, but 15% of all boards are scrapped during production, and cannot be sold. The variable overhead rate to use Machine A is $150 per hour. The boards are sold for a price of $30 each.
Which machine is more profitable to run on a daily basis, and by how much?