Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 12, Problem 14P
To determine
Calculate the additional annual cost.
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Estimated sales of a product is 30000 units. Two kinds of raw materials P and Q are required for manufacturing the product. Each unit of the product requires 2
units of P and 4 units of Q. The estimated cost of the P and Q OMR 2 and OMR 3 respectively.
The estimated opening balance in the beginning of the next year: finished goods: 4000 units; P: 6000 units; Q: 10000 units.
The desirable closing balance at the end of the next year: finished product: 6000 units: P: 10000 units: Q: 12000 units.
Which of the following shows the total cost of raw materials (OMR) to be purchased in Material Purchase Budget.
Select one:
O a. P = 162000 and Q = 181000
O b. P= 136000 and Q= 390000
O c.P = 124000 and Q =324000
O d. P = 134000 and Q = 334000
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A manufacturing company is considering a capacity expansion investment at the cost of $241,797 with no salvage value. The expansion would enable the company to produce up to 27,876 parts per year and the useful life of the additional capacity is seven years. Each part would generate $3.65 net profit and annual operating
and maintenance costs are estimated at $28,137 per year. The market demand for the parts is unlimited, all parts produced will be sold. The MARR of the firm is 10%.
The minimum annual production rate to make this investment justifiable is:
Enter your answer in this form: 12345.67
A company is considering replacing a machine (defender) that was bought
six years ago for $50,000 and has now malfunctioned. The machine can be repaired to
extend its life by five more years. If repaired, the machine will require an operating cost
of $10,000 per year. If it is replaced, the new machine (challenger) will cost $44,000, will
last for six years, and will have operating expenses of $5,000 per year. The challenger
will have zero salvage value at the end of its six year life. The malfunctioned defender
can be sold at a current market value of $15,000. If MARR is 12% per year, what is
the maximum amount that the company should spend to repair the existing machine
instead of switching to the challenger? Use the outsider viewpoint method. (Note: All
values are before taxes, no tax calculations are necessary).
Chapter 12 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - Prob. 3PCh. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10PCh. 12 - Prob. 11P
Ch. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26PCh. 12 - Prob. 27PCh. 12 - Prob. 28P
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