i need the answer quickly 2. Three different products are manufactured in an existing batch process. Thedetails are as follows:Product ValueProductkg/batchBatches/y($/kg)A50005.52015006.251330005.7516The cost of manufacturing is $0.75 million/y. The demand for these products isincreasing, and the crystallization step has been determined to be the bottleneck toincreasing the capacity. It is desired to add 25% capacity to this process. The internalhurdle rate for process improvements is 17% p.a. over five years.a. If a new batch crystallizer, which allows for a 25% capacity increase, costs$850,000, do you recommend this process improvement?b. Capital funds are tight, and it has been determined that the maximum investmentpossible is $600,000, resulting in a smaller new crystallizer. Using this crystallizer,identical profitability as found in Part (a) has been determined. Determine whatcapacity increase results from purchasing the smaller crystallizer.c. Suppose that it is now possible to purchase the $850,000 crystallizer, therebyincreasing capacity by 25%. However, the purchase of this crystallizer requiresthat the DCFROR (for this incremental investment) be at least 40% over fiveyears. Is this DCFROR reached?

First of all, we are required to find the total product value and profit before any improvement…

2. Three different products are manufactured in an existing batch process. The details are as follows: Product Value Product kg/batch Batchesly ($/kg) A 5000 5.5 20 1500 6.25 13 C 3000 5.75 16 The cost of manufacturing is $0.75 million/y. The demand for these products is increasing, and the crystallization step has been determined to be the bottleneck to increasing the capacity. It is desired to add 25% capacity to this process. The internal hurdle rate for process improvements is 17% p.a. over five years.

2. Three different products are manufactured in an existing batch process. The details are as follows: Product Value Product kg/batch Batchesly ($/kg) A 5000 5.5 20 1500 6.25 13 C 3000 5.75 16 The cost of manufacturing is $0.75 million/y. The demand for these products is increasing, and the crystallization step has been determined to be the bottleneck to increasing the capacity. It is desired to add 25% capacity to this process. The internal hurdle rate for process improvements is 17% p.a. over five years.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 9E: Stahman, Inc., estimates its hidden external failure costs using the Taguchi loss function. Stahlman...

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Question

i need the answer quickly

2. Three different products are manufactured in an existing batch process. The
details are as follows:
Product Value
Product
kg/batch
Batches/y
($/kg)
A
5000
5.5
20
1500
6.25
13
3000
5.75
16
The cost of manufacturing is $0.75 million/y. The demand for these products is
increasing, and the crystallization step has been determined to be the bottleneck to
increasing the capacity. It is desired to add 25% capacity to this process. The internal
hurdle rate for process improvements is 17% p.a. over five years.
a. If a new batch crystallizer, which allows for a 25% capacity increase, costs
$850,000, do you recommend this process improvement?
b. Capital funds are tight, and it has been determined that the maximum investment
possible is $600,000, resulting in a smaller new crystallizer. Using this crystallizer,
identical profitability as found in Part (a) has been determined. Determine what
capacity increase results from purchasing the smaller crystallizer.
c. Suppose that it is now possible to purchase the $850,000 crystallizer, thereby
increasing capacity by 25%. However, the purchase of this crystallizer requires
that the DCFROR (for this incremental investment) be at least 40% over five
years. Is this DCFROR reached?

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