A manufacturing process can be designed for varying degrees of automation. The following is relevant cost information. Determine which is best by after-tax analysis using an income tax rate of 29%, an after-tax MARR of 16%, and SL depreciation. Assume that each has a life of six years and no BV or MV. D Degree A B C D Click the icon to view the interest and annuity table for discrete compounding when the MARR is 16% per year. First Cost $12,000 13,000 20,000 27,000 Annual Labor Expense $8,500 7,500 4,000 2,500 Annual Power and Maintenance Expense $500 800 1,100 1,600
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- Calculate the AW for the Degree A, B, C, D
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- You are asked to evaluate ergonomic interventions for your company based on the following projections: Decreased annual Workers' Compensation costs: $13, 060 Increased annual production: $17,501 Initial purchase costs: $4, 561 If you have an expectation of 3.75% interest over a 6-year period, what would you calculate the multiplier for the Worker's Comp equivalence calculation to be if you're asked to evaluate the future worth over the life of the project?Perform a present worth analysis of equal-service machines that have the costs shown on the next page, if the MARR is 10% per year. Revenues for all three alternatives are expected to be the same.An electrical contractor has in his service a fleet of 10 vans of varying ages. With a view to standardizing his fleet with a single make, he wishes to know what the annual cost, at the economic life, will be for a van with the following characteristic: All cost is in constant dollars. His opportunity cost of capital before taxes is 20 percent. A before-tax analysis is required
- Your company has reviewed its new product that it introduced last year, and it has been found that the annual salesIt amounts to (8,000) units, the unit selling price is (140) dinars, and annual fixed costs are (27,000)dinars and the variable cost of the unit (60) dinars. You are asked to answer the following, using an analysisTie level at it:1- What is the current break-even size, calculate it algebraically and graphically.2- Calculate the profit under the current sales volume.3- To what extent can the sales volume be increased if the company wants to achieve net profits that increase?(25%) of the profit achieved under the current prevailing situation, that is, in light of the current sales volume?4- To what extent can fixed costs be reduced, if the company wants to achieve net profits that increase?(20) percent of the profit achieved under the current prevailing situation, that is, in light of the current sales volume?Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are given. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on AW. State your assumptions.Three production processes - A, B, and C - have the following cost structure: the selling price is 6.22 per unit Process Fixed Cost per Year Variable Cost per Unit A 109532 3.83 B 86834 4.29 C 87149 4.41 4 How many units per year must be sold with process A to have annual pre-tax profits of 42743 if the selling price is 6.22 per unit? (Round to the nearest integer) 5 How many units per year must be sold with process B to have annual pre-tax profits of 42743 if the selling price is 6.22 per unit? (Round to the nearest integer). 6
- The Fence Company is setting up a new production line to produce top rails. The relevant data for two alternatives are shown below. Solve, a. Based on MARR of 8%, determine the annual rate of production for which the alternatives are equally economical. b. If it is estimated that production will be 300 top rails per year, which alternative is preferred and what will be the total annual cost?In a new, highly automated factory, labor costs are expected to decrease at an annual rate of 5%; material costs will increase at an annual rate of 4%; overhead costs will increase at 8%. The labor, material, and overhead costsat the end of the first year are $2 million, $3 million, and $1.6 million, respectively. The time value of money rate is 11% and the time horizon is 7years. a. Determine the dollar value for each cost category (labor, material,overhead) for each year and the total cost for each year. b. Determine the present worth of each cost category and the total cost. c. Determine the annual worth over 7 years that is equivalent to the present worth of the total cost.Two fixtures are being considered for a particular job in a manufacturing firm. The pertinent data for their comparison are summarized in Table. The effective federal and state income tax rate is 25%. Depreciation recapture is also taxed at 25%. If the after-tax MARR is 8% per year, which of the twofixtures should be recommended? State any important assumptions you make in your analysis.
- APPLY THE CONCEPTS: Effect of Changes to Sales Price, Variable Costs and Fixed Costs Now consider each of the following scenarios for Gordon Products. Calculate the contribution margin (CM) per unit, rounded to nearest dollar, and the new break-even point in units, rounded to the nearest whole unit, for each scenario separately. Scenario 1 Scenario 2 Scenario 3 Gordon will dispose of a machine in the factory. The depreciation on that equipment is $500 per month. After some extensive market research, Gordon has determined that a sales price increase of $2 per unit will not affect the sales volume and will be effective immediately. Gordon has been experiencing quality problems with a materials supplier. Changing suppliers will improve the quality of the product but will cause direct materials costs to increase by $1 per unit. CM per unit: $fill in the blank e2f800fbc041002_1 CM per unit: $fill in the blank e2f800fbc041002_2 CM per unit: $fill in the blank e2f800fbc041002_3…Consider the following: A factory can produce 150,000 units of a good/year at a cost of $100/unit may produce the good for 2 years Retail price is initially $500/unit, but will either increase or decrease by $100 during year 1, and then subsequently increase or decrease by $200 during year 2. Each year, the increase or decrease is equally likely Fixed costs of running the factory are $50M per year if the factory is implemented (not including rent) Rent is $10M, whether or not the factory is set-up We will assume risk neutrality and a 10% cost of capital For simplicity, we will assume that there is no initial (year 0) cashflow associated with the factory The production technology of the factory allows for flexible starting (but not stopping). This means that in year 1, the factory may be operated or not. If the factory is operational in year 1, it will also be operational in year 2. If the factory is not operational in year 1, then it may either be operated or not in year 2. What is…A thermoplastic film manufacturer is trying to decide between 5 types of thermoforming molding processes to be added to its molding operation. The estimated costs and revenues are shown below. Compare them on the basis of the IRR method and determine which process should be selected if the company's MARR is 7% per year. Select the best alternative by performing an IRR incremental analysis. Justify your answer.