A jalapeno canning company is faced with a make/buy

Chapter 13, Problem 12.57

(choose chapter or problem)

A jalapeno canning company is faced with a make/buy decision. Cardboard shipping cartons can bepurchased for $0.60 each or made in-house. If manufactured,two machines will be required. MachineX will cost $20,000 and have a life of 6 years with a$2000 salvage value. Machine Y will cost $11,000and have a life of 4 years with no salvage value. Theannual maintenance cost for machines X and Y are$6000 and $5000 per year, respectively. A total offour operators will be required for the two machinesat a rate of $22.50 per hour per person. In a normal 8-hour day, the four operators and two machines canproduce 1000 cartons. The variable cost per cartonassociated with the in-house option is closest to:(a) $0.0625(b) $0.10(c) $0.72(d) $0.81