The maker of Winglow is purchasing a new stamping machine. Two options are being considered, Rooney and Blair. The sales forecast for Winglow is 8,750 units for next year. If purchased, the Rooney will increase plant fixed costs by $21,000 and reduce variable costs by $8.60 per unit. The Blair would increase fixed costs by $4,500 and reduce variable costs by $11.00 per unit. If variable costs are now $20 per unit, which machine should be purchased?
a) Blair or Rooney?
Show the cost figures used to reach your decision:
b) Impact of Rooney = Current Fixed Costs + $ ____________________
c) Impact of Blair = Current Fixed Costs + $ ___________________