In building their plant, the officers of the International Leather Company had the choice alternatives. One alternative is to build Metro Manila where the plant would cost P2,000,000. Labor would cost annually P120,000 and annual overhead P40,000. Taxes and insurance would total 5% of the first cost of the plant. The second alternative would be to build in Bulacan a plant costing P2,250,000. Labor would cost P100,000 annually and overhead would be P55,000. Taxes and insurance would be 3% of the first cost. The cost of raw materials would be the same in either plant. If capital must be recovered within 10 years and money is worth at least 20%, which site should the officers company choose? Ans. Plant in Metro Manila

In building their plant, the officers of the International Leather Company had the choice alternatives. One alternative is to build Metro Manila where the plant would cost P2,000,000. Labor would cost annually P120,000 and annual overhead P40,000. Taxes and insurance would total 5% of the first cost of the plant. The second alternative would be to build in Bulacan a plant costing P2,250,000. Labor would cost P100,000 annually and overhead would be P55,000. Taxes and insurance would be 3% of the first cost. The cost of raw materials would be the same in either plant. If capital must be recovered within 10 years and money is worth at least 20%, which site should the officers company choose? Ans. Plant in Metro Manila

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In building their plant, the officers of the International Leather Company had the choice between alternatives:One alternative is to build in Metro Manila where the plant would cost P2,000,000. Labor would cost annually P120,000 and annual overhead P40,000. Taxes and insurance would total 5% of the first cost of the plant.The second alternative would be to build in Bulacan a plant costing P2,250,000. Labor would cost P100,000 and overhead would be P55,000. Taxes and insurances would be 3% of the first cost. The cost of raw materials would be the same in either plant. If capital must be recovered within 10 years and money is worth at least 20%, which site should the officers of the company choose?*Use any method.
13.12 You work for Bellevue Window Products. While performing an analysis for a new window prod- uct, you found a report from last year that pro- vided the following information regarding the manufacture of a similar product: annual produc- tion rate T 40,000 units; selling price = $70 per unit; fixed production cost = $240,000 per year; variable production cost = $1,700,000 per year; variable selling expenses = $96,000 per year. As a first-cut, you decide to use this information to estimate (a) the breakeven production rate per year, (b) the company's profit last year, and (c) the annual production rate that would generate a profit of $1,000,000 per year. What are your estimates?
2. Tom borrowed Php500,000 from her parents to open a spa. He pays her parents a 5% yearly return on the money they lent her. Her other yearly fixed costs equal Php150,000 and his variable costs equal Php200,000. In her first year, Tom had a total of 2,000 customers at a price of Php300/customer. Tom's total fixed cost is 675000 – WRONG ANS
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Consider the following two production choices for Matson Engineering: A FC 100,000 150,000 AOC 10,000 12,000 SV 8,000 14,000 L/hr $30 $25 # of People 3 2 Output/hr 10 T years 8 If Matson's MARR is 10% what is the breakeven quantity between these two machines? Group of answer choices А. 382 В. 604 С. 411 D. 321
A university is trying to determine how much it should charge for tickets to basketball games to help offset the expenses of the new arena. The cost to build the arena including labor, materials. e tc. was $92 million. Each year the maintenance cost is expected to increase by 5% as the building gets older. 1l1e maintenance cost for the first year is $150.000. Utilities arc expected to average about $200.000 per year and labor costs $300,000. The average attendance at basketball games over the year is expected to be J00.000 people (or 100.000 tickets sold to events). Assuming the arena has no other source of income besides regular ticket sales (not including student tickets) for basketball games, what should the university charge so that it can recover at least a 6% cost of borrowing on its investment? ll1c university expects the arena to be used for 40 years and 10 have no appreciable salvage value.
Problem 4. In the design of an automobile engine part, an engineer has a choice ofeither steel casting or an aluminum alloy casting. Either machine provides the sameservice. However, the steel casting weighs 8 ounces, compared with 5 ounces for thealuminum casting. Every pound of extra weight in the automobile has been assigned apenalty of $6 to account for increased fuel consumption during the life cycle of the car.The steel casting costs $3.20 per pound, while the aluminum allow can be cast for $7.40per pound. Machining cost per casting are $5.00 for steel and $4.20 for aluminum.Which material should the engineer select, and what is the difference in unit costs? 1pound = 16 ounce
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The Marketing Department has completed its estimates of cash flows for your project and has given you the table below: Year Expenses Revenue -10,000 -2,000 -2,000 -2,000 -2,000 -2,000 0 1 2 O b. 20% O c. 30% d. 10% O e. 15% 3 4 5 6 7 8 9 10 Compute the rate of return (i*): a. answer not given -2,000 -2,000 -2,000 -2,000 -2,000 0 4,466 4,466 4,466 4,466 4,466 4,466 4,466 4,466 4,466 4,466
6. Machine A and Machine B are being considered for the production of a part of a product. The impor- tant differences between the machines are: Machine A Machine B 100 parts/hr 130 parts/hr Production rate Hours available for production Rejection rate 7 hrs/day 6 hrs/day 3 % 10 % The material cost is $6.00 per part, the operator cost is $15.00 per hour, and the variable overhead cost is $5.00 per hour. All defect-free parts produced can be sold for $12 each, and the rejected parts have no value. Assume that the daily demand for this part is large enough that all defect-free parts can be sold. Which machine should be selected? • What should the rejection rate be for Machine B to be as profitable as Machine A?