In connection with surfacing a new highway, a contractor has a choice of two sites on which to set up the asphalt-mixing plant equipment. The contractor estimates that it will cost $1.25 per cubic yard mile (yd³ -mile) to haul theasphalt-paving material from the mixing plant to the job location. Factors relating to the two mixing sites are asfollows:Cost FactorAverage hauling distanceMonthly rental of siteCost to set to and removeequipmentHauling expenseFlagpersonSite A6 miles$1,200$17,000$1.25 / yd³ -mileNot requiredSite B4.3 miles$5,500$25,000$1.25 / yd³ -mile$96 / dayThe job requires 50,000 cubic yards of mixed-asphalt-paving material. It is estimated that four months (17 weeks offive working days per week) will be required for the job. Compare the two sites in terms of their total costs. Assumethat the cost of the return trip is negligible. A) Which is the better site? B) For the selected site, how many cubicyards of paving material does the contractor have to deliver before staring to make a profit if paid $8.35 per cubicyard delivered to the job location?

Cost Site A Site B Rent (Fixed cost) =1200*4(4 months) =4800 =5500*4=22000 Set up/removal (Fixed…

Answered: In connection with surfacing a new…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 11E: Nizam Company produces speaker cabinets. Recently, Nizam switched from a traditional departmental...

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. In connection with surfacing a new highway, acontractor has a choice of two sites on which toset up the mixing plant equipment.The contractor estimates that it will cost P51.75per cubic meter per kilometer to haul the asphaltpaving material from the mixing plant to the jobsite.If site B is selected, there will be an addedcharge of P600 per day for a flagman and it needs 2 flagman.The job requires 50,000 cubic meters of mixedasphalt paving material. It is estimated that fourmonths (17 weeks of five working days perweek) will be required for the job.
A chemical company is considering two types of incinerators to burn solid waste generated by a chemical operation. Both incinerators have a burning capacity of 20 tons per day. The following data have been compiled for comparison of the two incinerators: If the firm's MARR is known to be 13%. determine the processing cost per tonof solid waste for each incinerator. Assume that incinerator B will be availablein the future at the same cost.
A mechanical engineer is considering two robots for improving materials handling in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual maintenance and operation (M&O) cost of $31,000, a $40,000 salvage value, and will improve net revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase net revenues by $119,000 per year. Which one should be selected on the basis of a rate of return analysis if the company’s MARR is 15% per year? Use a three-year study period.
A heavy construction firm has been awarded a contract to build a large concrete dam. It is expected that a total of 8 years will be required to complete the work. The firm will buy $600,000 worth of special equipment for the job. During the preparation of the job cost estimate, the following utilization schedule was computed for the special equipment:
A metal plating company is considering four different methods for recovering by-product heavy metals from a manufacturing site’s liquid waste. The investment costs and annual net incomes associated with each method have been estimated. All methods have an 8-year life; the MARR is 11% per year; and an AW-based ROR analysis is required. (a) If the methods are independent (because they can be implemented at different plants), which ones are acceptable? (b) If the methods are mutually exclusive, determine which one should be selected. Method First Cost, $ Salvage Value, $ Annual Net Income, $/Year A −30,000 +1,000 +4,000 B −36,000 +2,000 +5,000 C −41,000 +500 +8,000 D −53,000 −2000 +10,500
Two alternatives are under consideration for a tapered fastening pin. Either design will serve the purpose and will involve the same material and manufacturing cost except for the lathe and grinder operations. Design A will require 16 hours of lathe time and 4.5 hours of grinder time per 1,000 units. Design B will require 7 hours of lathe time and 12 hours of grinder time per 1,000 units. The operating cost of the lathe including labor is ₱200 per hour. The operating cost of the grinder including labor is ₱150per hour. Which design should be adopted if 100,000 units are required per year and what is the economic advantage of the best alternative?
A process control manager is considering two robots to improve materials handling capacity in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual M&O cost of $31,000, a $40,000 salvage value, and will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase revenues by $119,000 per year. The company’s MARR is 15% per year and it uses a 3-year study period for economic evaluations. Which one should the manager select (a) on the basis of ROR values, and (b) on the basis of the incremental ROR value? (c) Which is the correct selection basis? Perform the analysis by hand or spreadsheet, as instructed.
Two lathes are being considered in the manufacture of certain machine parts. Data is given below, all cost in peso: LATHE A LATHE B First Cost 40,000 56,000 Salvage Value 5,000 7,000 Annual Maintenance 2,000 2,800 Operation, Cost/hour 4 3.5 Life, in years 10 12 Time per part (hours) 0.40 0.25 REQUIRED: If the number of parts is 10,000 units, which lathe will you recommend? Use ROR If the number of parts is 10,000 units, which lathe will you recommend? Use EUAC
For a construction job, a contractor can haul rock by means of an ordinary 10 cubic yard dump truck, or he can use a combination rig where a 10 cubic yard truck also pulls an 8 cubic yard trailer. When this combination is used, the trailer slides into the empty dump truck body for the return trip. The total equivalent operating cost, including the driver, amortization of capital, interest on the investment, fuel, and maintenance is P625/hour for the dump truck and P875/hour for the tandem rig. For the required 10-mile haul, the loading and unloading, hauling, and return times are as follows; Time, minutes Conventional Double Rig Loading 3 5 Unloading 4 10 Hauling 24 28 Return 20 24 How much is the difference in cost per unit volume between the two alternatives?
An outside contractor offers to do the finishing operation for 10,000 units at $9 per unit, triple the $3 per unit that it costs Denver to do the finishing in-house. Should Denver accept the subcontractor’s offer? Show your calculations.
Engineering Economics . A call to bid was advertised in a national newspaper for the construction of a transmission line from a mini-hydroelectric powerplant to a substation that is 5,535 meters away. The electric posts must be placed at intervals of 50 meters. The powerhouse is 15 meters from the first electric post, and the substation is 20 meters from the last electric post. Prepare the estimate for the job using the following data: Cost of one post = P 5,000 each, delivered to the site; laborers at P 350 per day. Five laborers can dig and erect 3 posts each day. Electricians at P 450 per day. Four electricians can string wires complete 150 meters per day. Electric wire costs P 40 per meter. Use only 5 laborers and 4 electricians for the project and a foreman at P 500 per day. Compute the direct cost. Add contingencies and profit which is 10% and 25% of the direct cost, respectively.
A contractor has been asked to quote for a job and has the following information available about the costs: Notes:1. The contract requires 400,000 bricks of this standard type. The contractor has 200,000 already in stock and will need to buy 200,000. The 200,000 at P100 per 1,000 in the quote above were bought at that price earlier in the year. The current replacement cost for this type of brick isP120 per 1,000. If the bricks are not used on this project the contractor is confident that he will be able to use them later on in the year.2. This is the purchase price of other materials that will be bought in as required.3. The contractor intends to work 800 hours of the skilled work himself and hire the rest in on an hourly basis at P12 per hour. If the contractor does not take on this job he can either work for other contractors at P12 per hour or complete urgently required work to his own house for which he has been quoted P12,000 by another contractor. 4. The contractor has 4…

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