Max Wayco, the business manager for Essey Industries, must select a new computer

ID: 2343474 • Letter: M

Question

Max Wayco, the business manager for Essey Industries, must select a new computer system for his assistant. Rental of Model A, which is similar to the model now being used, is $2,200 per year. Model B is a deluxe system that rents for $2,900 per year and will require a new desk for the assistant. The annual desk rental charge is $750. The assistant's salary of $1,200 per month will not change. If Model B is rented, $280 in annual software training costs will be incurred. Model B has greater capacity and is expected to save $1,550 per year in part-time wages. Upkeep and operating costs will not differ between the two models.

Need help computing the computer and software rental for A and B and the favorable difference.

Explanation / Answer

Model A

Model B

Difference

Rental

2200

2900

-700

Desk Rental

750

-750

Assistant

1200

Training

280

-280

Part-time wage savings

-1550

1550

Total

3400

3580

-180

Model A will cost 180 less.