You company is in the business of making computer monitors. Through a market survey, the company has identified a demand for a new computer monitor product and has also determined that the market would bear a unit price of $207. To manufacture this new product, however, the company will need to invest in a new production assembly line. You are asked by your boss to consider two options of production assembly lines. • Option #1: A labor-intensive process which has a fixed cost of $348,000 and a variable cost of $153 per monitor.
• Option #2: A highly automated process (capital intensive) that has a fixed costs of $1,264,000 and a variable cost of $94.5 per monitor.
Your job is to figure out how many computer monitors the company has to produce (and sell) to justify the high cost of initial investment for Option #1.