The management of a private hospital is considering automating some back office functions. This would replace five personnel that currently cover three shifts per day, 365 days per year. Each person earns $35,000 per year. Company-paid benefits and overhead are 45% of wages. Money costs 8% after income taxes. Combined federal and state income taxes are 28%. Annual property taxes and maintenance are and 4% of investment, respectively. Depreciation is 15-year straight line. Disregarding inflation, how large an investment in the automation project can be economically justified?
The management of a private hospital is considering automating some back office functions. This would replace five personnel that currently cover three shifts per day, 365 days per year. Each person earns $35,000 per year. Company-paid benefits and overhead are 45% of wages. Money costs 8% after income taxes. Combined federal and state income taxes are 28%. Annual property taxes and maintenance are and 4% of investment, respectively. Depreciation is 15-year straight line. Disregarding inflation, how large an investment in the automation project can be economically justified?
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 8CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...
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The management of a private hospital is considering automating some back office functions. This would replace five personnel that currently cover three shifts per day, 365 days per year. Each person earns $35,000 per year. Company-paid benefits and overhead are 45% of wages. Money costs 8% after income taxes. Combined federal and state income taxes are 28%. Annual property taxes and maintenance are and 4% of investment, respectively.
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