A machine that is not equipped with a brake “costs” 30 seconds after the power is turned off upon completion of each piece, thus preventing removal of the work from the machine. The time per piece, exclusive if this stopping time is 2 minutes. The machine is used to produce 40,000 pieces per year. The operator receive P35.00 per hour and the machine overhead rate is P20.00 per hour. How much could the company afford to pay for a brake that would reduce the stopping time to 3 seconds, if it would have a life of 5 years? Assume zero salvage value, capital worth 18% and that repairs and maintenance would total not over P300.000 per month.
A machine that is not equipped with a brake “costs” 30 seconds after the power is turned off upon completion of each piece, thus preventing removal of the work from the machine. The time per piece, exclusive if this stopping time is 2 minutes. The machine is used to produce 40,000 pieces per year. The operator receive P35.00 per hour and the machine overhead rate is P20.00 per hour. How much could the company afford to pay for a brake that would reduce the stopping time to 3 seconds, if it would have a life of 5 years? Assume zero salvage value, capital worth 18% and that repairs and maintenance would total not over P300.000 per month.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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Chapter13: The Balanced Scorecard: Strategic-based Control
Section: Chapter Questions
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A machine that is not equipped with a brake “costs” 30 seconds after the power is turned
off upon completion of each piece, thus preventing removal of the work from the machine.
The time per piece, exclusive if this stopping time is 2 minutes. The machine is used to
produce 40,000 pieces per year. The operator receive P35.00 per hour and the machine
overhead rate is P20.00 per hour.
How much could the company afford to pay for a brake that would reduce the stopping time
to 3 seconds, if it would have a life of 5 years? Assume zero salvage value, capital worth 18%
and that repairs and maintenance would total not over P300.000 per month.
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