Newtel Inc. manufactures Cell phones. Last year Newtel
sold 30,000 phones at $80 each. Total costs amounted to $1,800,000
of which $600,000 were considered fixed.
In an attempt to improve its product,
the company is considering replacing a component part that has a
cost of $16 with a new and better part costing $26 per unit in the
coming year. A new machine would also be needed to increase plant
capacity. The machine would cost $100,000 with a useful life...