question archive The Chester company will increase its automation for the Cent product by 2

The Chester company will increase its automation for the Cent product by 2

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The Chester company will increase its automation for the Cent product by 2.0. Assuming no further change in capacity, how much will this investment in automation cost?
 
  $7,700,000
  $15,400,000
  $17,600,000
  $8,800,000

 

 

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Answer:

Following are the informations of Cent:
Current automation = 7%
Capacity of next round = 1,100
New automation = 7 + 2 = 9

Investment in automation cost = Capacity * (4 * (New automation - previous automation)) * 1000
= 1,100 * (4 * (9 - 7)) * 1,000
= 1,100 * (4 * 2) * 1000
= 1,100 * 8 * 1,000
= $8,800,000.

Investment in automation cost = $8,800,000.