1. Mwambashi manganese processing plant was designed and constructed to produce at least 1 million kg of manganese per year. However, for unknown reasons the plant has only been able to produce 50% of the design capacity annually. At full production, all fixed and invariant charges amount to 35% of the total annual product cost while the cost of raw materials and other production costs that vary with the production output of the plant amount to 40% of total product cost. On the other hand, 25% of the total product cost represents variable overhead and miscellaneous expenses which are directly proportional to the production rate raised to the power 1.2. What will be the total cost per kg of product if the plant is producing at 50% of full capacity. Also, determine the percent change in total cost per kg of product at full capacity and half capacity production.
1. Mwambashi manganese processing plant was designed and constructed to produce at least 1 million kg of manganese per year. However, for unknown reasons the plant has only been able to produce 50% of the design capacity annually. At full production, all fixed and invariant charges amount to 35% of the total annual product cost while the cost of raw materials and other production costs that vary with the production output of the plant amount to 40% of total product cost. On the other hand, 25% of the total product cost represents variable overhead and miscellaneous expenses which are directly proportional to the production rate raised to the power 1.2. What will be the total cost per kg of product if the plant is producing at 50% of full capacity. Also, determine the percent change in total cost per kg of product at full capacity and half capacity production.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Transcribed Image Text:1. Mwambashi manganese processing plant was designed and constructed to produce
at least 1 million kg of manganese per year. However, for unknown reasons the plant
has only been able to produce 50% of the design capacity annually. At full production,
all fixed and invariant charges amount to 35% of the total annual product cost while
the cost of raw materials and other production costs that vary with the production
output of the plant amount to 40% of total product cost. On the other hand, 25% of the
total product cost represents variable overhead and miscellaneous expenses which
are directly proportional to the production rate raised to the power 1.2.
What will be the total cost per kg of product if the plant is producing at 50% of full
capacity. Also, determine the percent change in total cost per kg of product at full
capacity and half capacity production.
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