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Explain Equivalent Annual Operating Costs?
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- Give an example of the Equivalent Annual Operating Cost?Illustrate the process of computing the capital costs and equivalent annual operating costs?"Boehm Compressors uses a lean production assembly line to make its compressors. In one assembly area, the demand is 100 parts per eight-hour day. It uses a container that holds eight parts. It typically takes about six hours to round-trip a container from one work center to the next and back again. It also desires to hold 15 percent safety stock of this part in the system" How many containers should Boehm Compressors be using? Calculate the maximum system inventory for this part If it reduced the number of containers by one, how would this impact the required round-trip time, all else being constant?"
- A company plans to design and build transport vehicles for the Army. The cost for the design is $10M. The cost for the test prototype is $2M. The cost to produce and test each production vehicle is $0.5M. What is the non-recurring cost? What is the recurring cost per vehicle? What price per vehicle must the company sell the vehicles to the government to make $50K profit per vehicle if the company sold 50 vehicles? 100 vehicles? Why does the price per vehicle go down when production goes up?What is the Equivalent Annual Operating Costs?What does it mean when recyclers gather containers until their marginal costs are equal to the container’s respective redemption prices?
- Differentiate between Capital Costs and Operating Costs?“The higher the MARR, the higher the price that a company should be willing to pay for equipment that reduces annual operating expenses.” Do you agree with this statement? Explain your answer.Lulu hypermarket estimates daily demand of 18 kgs for a product. It costs RO 100 to make and receive an order, and it takes 16 workdays to receive it. The annual holding cost is 25 % of purchase price. The price RO 2 per kg. The company is operating 5 days per week, and a total of 210 workdays in one year. What is the minimum annual total holding and ordering cost in RO? Round-up to the nearest integer
- The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order $520 Relevant carrying costs per year for each product: Required annual return on investment 16% Required other costs per year $9 Annual demand is 32,000 prroducts per year. The purchase price per product is $51.What is the economic order quantity?M. P. VanOyen Manufacturing has gone out on bid for a regu lator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is $50, and annual holding cost per unit is $5. a) What is the economic order quantity?b) Which supplier should be used? Why?c) What is the optimal order quantity and total annual cost of ordering, purchasing, and holding the component?How do the Modified Accelerated Cost Recovery System (MACRS) givetaxpayers a break?