A. Calculate the difference in novs between the make and buy optiom. Express all cost as positive values in your calculations.B should you continue to produce in house or accept the bid for taiwanese supplier? One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. Thesupplier has bid $0.10 per part, given a forecast you provided of 200,000 parts in year 1; 300,000 in year 2; and 500,000 in year 3.Shipping and handling of parts from the supplier's factory is estimated at $0.03 per unit. Additional inventory handling charges shouldamount to $0.005 per unit. Finally, administrative costs are estimated at $20 per month.Although your plant is able to continue producing the part, the plant would need to invest in another molding machine, which wouldcost $20,000. Direct materials can be purchased for $0.04 per unit. Direct labor is estimated at $0.05 per unit for wages plus a 50percent surcharge for benefits and, indirect labor is estimated at $0.011 per unit plus 50 percent benefits. Up-front engineering anddesign costs will amount to $30,000. Finally, management has insisted that overhead be allocated if the parts are made in-house at arate of 100 percent of direct labor wage costs. The firm uses a cost of capital of 15 percent per year.

Demand Data: Year 1100,000Year 2200,000Year 3300,000Taiwanese supplier Bid's Data :Cost per unit =…

A. Calculate the difference in novs between the make and buy optiom. Express all cost as positive values in your calculations. B should you continue to produce in house or accept the bid for taiwanese supplier?

A. Calculate the difference in novs between the make and buy optiom. Express all cost as positive values in your calculations. B should you continue to produce in house or accept the bid for taiwanese supplier?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: The utility possibility frontier is defined as the set of maximum utility levels for all consumers…

A: The Utility Possibility Frontier (UPF) represents the maximum degree of total utility that can be…

Q: What is the expected after-tax cash flow from selling a piece of equipment if TwoPlus purchases the…

A: The expected after-tax cash flow from selling the equipment is $34,778.94 (plus or minus…

Q: Which of the following is an example of a subsidy? A) Import quota B) Excise tax C) Export subsidy…

A: Note: As per guidelines only first question will be answered.We must decide which cut from the list…

Q: The graph depicts market conditions for an unregulated, profit-maximizing monopolist that is unable…

A: Deadweight loss is the cost to society created by market inefficiency, which occurs when the market…

Q: The Texas Department of Transportation (TxDOT) is considering two designs for crash barriers along a…

A: Rate of return, often abbreviated as ROR or simply return, is a measure used to evaluate the…

Q: production function 10Q = 1600L-4,800, where L is hired labour hours. If the wage rate that laborers…

A: The cost function quantifies the overall production expenses, determined by multiplying the labor…

Q: Home's demand curve for wheat is P = 10 - (1/20)Qd. Its supply curve is P = 4 + (1/20)Qs Foreign's…

A: A tariff is a tax or duty imposed by a government on goods or services that are imported or, less…

Q: Three mutually exclusive electric-vehicle battery systems are being investigated by a large…

A: Net Present Worth (NPW) serves as a crucial financial metric utilized in capital budgeting,…

Q: ex Production function is f(x, 1x2)= min(x,, 2x₂ Dwhat are the conditional factor demand of y = 10 2…

A: Given utility function: y = f(x1, x2) = min(x1, 2x2)This is a fixed-proportion utility function…

Q: Portsmouth Bank has foreclosed on a home mortgage and is selling the house at auction. There are…

A: The objective of the question is to calculate the expected revenue for Portsmouth Bank from the sale…

Q: Question 39. Consider the graph below. Which of the following occurrences will shift the supply of…

A: The supply of bonds in financial markets refers to the aggregate sum of bonds that are accessible…

Q: A regional automobile dealership sent out fliers to perspective customers indicating that they had…

A: How many fliers the automobile dealership sent out?31,748 fliers What is the expected value of the…

Q: For equipment that has a first cost of $10,500, the estimated operating costs and year-end salvage…

A: The initial cost P=11500. The salvage value and annual cost change each year. The table below shows…

Q: Which of the following would cause a rightward shift of the supply curve? a) Increase in production…

A: A rightward shift of the supply curve indicates an increase in the quantity supplied at every given…

Q: Please help me with the following question

A: Identify price and quantity changes:Price change (ΔP) = Price at L (P_L) - Price at K (P_K) = $10 -…

Q: Assume that 3 year Treasury note has no maturity premium and that the risk free rate is 5 percent.…

A: The inflation rate measures the increase in the price of goods and services over the years. The…

Q: The market demand and supply for Ithaca farmland is given by the following functions: Qd = 10,000 -…

A: The equilibrium occurs where the demand and supply forces are equal. The price regulation leads to…

Q: Do not use chatgpt. Thank you!

A: Detailed answer is given belowExplanation:

Q: "In a hypothetical economy, the government implements a fiscal stimulus package by increasing public…

A: The issue examines the macroeconomic impacts of a financial improvement bundle through expanded…

Q: 1. Assume the price of a unit of Good 1 (Kota) is R20 (y-axis). The price of a unit of Good 2(Pizza)…

A: Budget constraint is the limitation that a consumer's income or available budget puts on the…

Q: Average Marginal Quantity Total Cost Total Cost Cost 0 $10.00 1 15.00 $15.00 $5.00 2 17.50 8.75 2.50…

A: Perfect competitive market refers to a type of market structure where the producers as well as…

Q: a. If Ca Ca is $120, Ig is $60, X, is-$10, and Gis $40, what is the economy's equilibrium GDP?

A: The economy is in a state of equilibrium when whereC: consumption,I: Investment,G: Government…

Q: 4. The following regression is fitted using variables identified that could be related to tuition…

A: I AM PROVIDING THE SOLUTION BELOW PLEASE DO REFER IT AND LET ME KNOW IF YOU HAVE ANY QUERIES. If you…

Q: Use the graph below to answer the folowing question: Dollars per unit b B fgh k X MR E y Z LRAC LRMC…

A: The monopoly market is represented by a single producer selling a unique product in the market. The…

Q: 4. COPYRIGHT PROTECTION. Because intellectual property amounts to a temporary monopoly, with all of…

A: Given,

Q: The Doug’s Delicious Diner faces a demand curve for its daily special in which there are an equal…

A: Marginal revenue is the extra revenue earned for selling one more unit. Under the law of diminishing…

Q: In which of these scenarios is the burden of the tax greater on buyers than on sellers? AA BB C C DD…

A: In case of graph D the tax burden is more on buyer than seller. Therefore, D is right option.…

Q: Help!

A: your answer is given below:Explanation:

Q: Q4. Following is the data of Quantity Demanded and Quantity Supplied of chicken in a chicken market…

A: When quantity supplied is lower than quantity demanded, it is called shortage. When quantity…

Q: Which of the following descriptions is most representative of the mix of revenues and expenditures…

A: Revenue(R) refers to the income generated by a business or organization from its operations or…

Q: (Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose…

A: The market of loanable funds represents the interaction between the lenders and borrowers in the…

Q: How might the introduction of a universal basic income (UBI) affect labor market participation rates…

A: The issue is to comprehend the likely effect of presenting a general essential pay (UBI) on work…

Q: 048 12 17 BAGELS Complete the following table by determining Charles's marginal rate of substitution…

A: It measures how much of one good person C is willing or ready to give up to obtain an additional…

Q: Given the following table: OUTPUT TOTAL COST 0 50 1 2 3 4 5 6 GRONDE 59 67 74 80 87 95 Part 1: The…

A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: Das Spielzeug is a profit-maximizing firm producing puzzles, which it can produce and sell in its…

A: The average cost is the per unit production cost of a commodity. It is the ratio of the total cost…

Q: Q6. The table below gives the demand schedule for a good. Price level Quantity Demanded 100 40 80 60…

A: Demand schedule signifies different quantity demanded for one producer at its diffreent price…

Q: The table below shows the total daily output for a firm producing specialty cakes and operating with…

A: The objective of the question is to calculate the short-run costs for a firm producing specialty…

Q: Suppose that a firm in a competitive market has the following cost curves: PRICE 20 18 16 14 132 0…

A: Business economics is concerned with navigating complex market scenarios that require considerable…

Q: At P4, this firm will: A graphThe graph shows the supply curves for a firm. Multiple Choice produce…

A: A competitive firm operates in a market with a number of sellers selling identical products. These…

Q: None

A: ParticularCash FlowFirst Cost120000O&M Cost30000per YearOverhead Cost35000in 3rd Year

Q: What is the likely effect of imposing trade tariffs on imported goods on the consumer price index…

A: The issue is to determine the effect of forcing exchange levies on imported products on the shopper…

Q: Ph

A: Game theory refers to a type mathematical discipline commonly applied to the analysis of interactive…

Q: 1. ] A company has the demand equation, x = P , P-8 p>8 (where p is in dollars, and x is in units).…

A: a) The point elasticity of demand when the price is $12 is -2.00.b) The percentage change in demand…

Q: The economy depicted does not engage in international trade and has no government. Planned aggregate…

A: Aggregate expenditure is the total amount of expenditure that is done by all the sectors of an…

Q: 6. Aggregate expenditure and income Suppose the following table shows consumption (C), investment…

A: The total amount of finished products and services produced in an economy over a given time period…

Q: The following table shows nominal GDP and an appropriate price index for a group of selected years.…

A: Macroeconomics examines the working, composition, and dynamics of an economy. To comprehend and…

Q: (Use Graph C) For this monopolist, at the profit maximizing level of output, MC Graph C Price ATC…

A: A monopolist maximizes its profit (or minimizes losses) by equating Marginal revenue (MR) with…

Q: What does the term "GDP" stand for in economics? a) Gross Domestic Product b) General Demand…

A: GDP stands for Gross Domestic Product.. It is a measure of the total value of all goods and services…

Q: Refer to the figure below. If the market becomes uncompetitive, and output is reduced to 500 000…

A: The term "market" has been used since ancient times. Alfred Marshall, a famous economist, pioneered…

Q: - Consider an economy with two consumers, A and B, and two goods. The endowments are w A = (1, 3)…

A: Given,

Question

One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The
supplier has bid $0.10 per part, given a forecast you provided of 200,000 parts in year 1; 300,000 in year 2; and 500,000 in year 3.
Shipping and handling of parts from the supplier's factory is estimated at $0.03 per unit. Additional inventory handling charges should
amount to $0.005 per unit. Finally, administrative costs are estimated at $20 per month.
Although your plant is able to continue producing the part, the plant would need to invest in another molding machine, which would
cost $20,000. Direct materials can be purchased for $0.04 per unit. Direct labor is estimated at $0.05 per unit for wages plus a 50
percent surcharge for benefits and, indirect labor is estimated at $0.011 per unit plus 50 percent benefits. Up-front engineering and
design costs will amount to $30,000. Finally, management has insisted that overhead be allocated if the parts are made in-house at a
rate of 100 percent of direct labor wage costs. The firm uses a cost of capital of 15 percent per year.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: define demand data

VIEW

Step 2: Determe the present value of future expense

VIEW

Step 3: explain if the management should accept the bid or not

VIEW

Solution

VIEW

Step by step

Solved in 4 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

In net present worth analysis over a period, if the net present worth value is equal to zero, the initial investment ______ a. has not produced profits b. has no certainty of gians c. has been fully account by the operation d. has a tendency to produce more losses e. has been applied with correct interest A company invests on selling computer units worth Php 32,000.00. The probability of maintaining this price throughout the year is 65% while that of less or more than 10% the expected are 15% and 20%, (a) what is the probability that the selling price for that year is more than the expected price? a. 0.8 b. 0.85 c. 0.25 d. 0.2 e. 1 f. 0.15 g. 0.65
Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the maturity stage, demanding some change. After rigorous research, management came up with the following decision variables.Expansion: 45% chance of gaining 1,500,00; 55% chance of losing XNew Product: 50% chance of gaining 900,000; 50% chance of losing 539740What must have been the value of expansion loss if expansion and new product will result to the same expected monetary values?
Two laser machines (A & B) used in a project and are being compared to choose one of them, for a medical center specialized in eye's treatments. The price of machine A is 1,200,000 Usdand requires an annual maintenance of 100,000 Usd, while the price of machine B is 1,000,000Dhs and requires an annual maintenance of 120,000 Usd. The expected life time for bothmachines is 8 years after which the two machines salvage values will be 150,000 Usd formachine A and 125,000 Usd for machine B. The MARR decided by the medical centeradministration is 9% per year. So tell the future calculated worth analysis to decide whuch a or b will be good to be purchased?
If the PW of an investment is negative, then we will recommend the investment. True or False?
A new snow making machine utilizes technology that permits snow to be produced in ambient temperature of 70 degrees Fahrenheit or below. The estimated cash flows for the ski resort contemplating this investment areuncertain as shown below (note: pr. = probability). The machine is expected to have a useful life of 12 years, and the MARR of the ski resort is 8% per year. What is the expected present worth of this investment?
Solve Q6 all the three sub-par
The expansion plan of a business firm requires the purchase of a parcel of land on which to build a structure, which they will need 5 years hence. The current costs are land, P1,000,000; building P3,500,000. Since these are not needed immediately, the firm plans to defer the purchase of the land and the construction of the building until they are needed. If the value of the land and the cost of the building are expected to appreciate at the rates of 20% and 8% per annum, respectively, what will be the total cost of the land and structure 5 years hence?
Consider the IRR and ERR measures of worth. If we define a “root” to mean a value for the measure that results in PW = 0, then which of the following statements is true? a. IRR can have multiple roots and ERR can have multiple roots b. IRR has only a single root but ERR can have multiple roots c. ERR has only a single root but IRR can have multiple roots d. IRR has only a single root and ERR has only a single root
An untreated electric wooden pole that will last 10 years under certain soil condition cost₱20,000. If a treated pole will last for 20 years, what is the maximum justifiable amount thatcan be paid for the treated pole, if the maximum return on investment is 20%. Consider annualtaxes and insurance amount to be 1% of first cost.
Company A expects to generate K150, 000 cash flows per year in perpetuity and the risk adjusted discount rate is 20%. What should be the certainty equivalent cash flows when the risk free rate is 10%
There may be no correct option, or more than one correct option..
Samsung Electronics is trying to reduce supply chain risk by makingmore responsible make/buy decisions through improved cost estimation. A high-usecomponent (expected usage is 5000 units per year) can be purchased for $25 perunit with delivery promised within a week. Alternatively, Samsung can make thecomponent inhouse and have it readily available at a cost of $5 per unit, ifequipment costing $150,000 is purchased. Labor and other operating costs areestimated to be $35,000 per year over the study period of 5 years. Salvage isestimated at 10% of first cost and MARR is 12% per year. Neglect the element ofavailability (a) to determine the breakeven quantity, and (b) to recommend makingor buying at the expected usage level.