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- A manufacturer has decided to outsource and offshore a small electric motor that it currently manufactures itself. It has found an offshore supplier that charges $925,000 for a minimum order quantity of 5,000 motors. Shipping costs for this quantity are $15,000. The buyer expects to place four orders per year to meet its annual need for 20,000 motors. Annual carrying cost is 25% of unit price, and import tariffs are 12% of unit price. The company expects to spend $12.500 per year on contracting and relationship maintenance. What is the total cost of outsourcing and offshoring this motor? 1) $208.65 per unit 2) $212.28 per unit 3) $213.71 per unit 4) None of these choicesEMERGENCY! Production just informed management that one of its five glycol squeezers has been destroyed by a rogue computer virus. Production capability is now only 23000 gallons at most. The squeezer cannot be fixed and IceLess cannot afford a replacement. This breakdown will NOT lower fixed costs. This breakdown will not change variable cost per unit, either. If only 23000 gallons are produced, and the earning target remains $94400 above fixed costs, what price per gallon must now be charged? (show your calculations What is the Contribution Margin Ratio (CMR) if the price is $8.82 per gallon? At a price of $10.95 per gallon, what will be the DOL (assume 23000 gallons are sold , that $94400 above fixed costs is to be earned, and that other costs are as initially given)(show your calculations).Your Area Director wants to purchase new ergonomic office equipment for your staff. The total purchase price is quoted by Herman Miller to be $22,656. The main reason for the proposed purchase is the high rate of lost work days due to low back and wrist/hand issues. These are common problems associated with poor ergonomic position and repetition. You can sell the equipment in 8 years and have a salvage value of $4,619. It is estimated that the purchase of the new equipment will cut your lost work days by 61% and save you an estimated $11,812 per year in the costs associated with the lost work days. What is your EUAW for this proposed purchase at an interest rate of 6%? A. $7,354 B. $4,886 C. $8,631 D. $6,625
- ! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $40,000, an annual operating cost (AOC) of $12,000, and a service life of 2 years. Method B will cost $70,000 to buy and will have an AOC of $6,000 over its 4-year service life. Method C costs $125,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at /= 12% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ ✓is selected. Method CCVP and Sensitivity Analysis (Single Product). Victoria, Inc., has annual fixed costs totaling $240,000 and variable costs of $6 per unit. Each unit of product is sold for $30. Victoria expects to sell 12,000 units this year (this is the base case). Required: 1. Find the break-even point in units. 2. How many units must be sold to earn an annual profit of $100,000? (Round to the nearest unit.) 3. Find the break-even point in sales dollars. 4. What amount of sales dollars is required to earn an annual profit of $140,000?A manufacturing company needs to know whether to produce components for a Bird Feeder in-house or buy the components from a fabricator. To make the components in-house, the company needs to buy an injection molding machine, which costs $9,000. The company expects to produce 10,000 units per year. The following estimates have been made: Fixed cost per year Variable cost per part Make $9,000 $6.45 Buy. $0 $7.20 a. What is the break-even point? b. If the number of units produced is 10,000, which option is cheaper: Make or Buy? Explain why. b. If the number of units produced is increased to 12,500, which option is cheaper: Make or Buy? Explain why.
- An outboard motor has an initial price of $1,080. A service contract costs $350 for the first year and increases $130 per year thereafter. The total cost of the outboard motor (in dollars) after n years is given by C(n) = 1,080 + 150n + 30n“, where n21. Complete parts (A) through (C). (A) Write an expression for the average cost per year, C(n), for n years. C(n) =O %DA construction manager just starting in private practice needs a van to carry crew and equipment. She can lease a used van for $3910 per year, paid at the beginning of each year, in which case maintenance is provied. Alternatively, she can buy a used van for $5407 and pay for maintenance herself. She expects to keep the van for three years at which time she could sell it for $1045. What is the most she should pay for uniform annual maintenance to make it worthwhile to buy the van instead of leasing it, if her MARR is 20%? Enter your answer as follow: 123456PRO Engineering is considering whether to purchase or lease a piece of earthmoving equipment.The data associated with the purchase are as followsInitial cost = $150,000Residual value = $12,000Maintenance cost = $1,800/per yearOperator cost per day = $300/dayIf the equipment is rented, the operator cost is incurred, at the rate of $300 per day and $100 for the daily rental of the equipment.Determine the minimum number of days per year the equipment must be used to justify the purchase. Use an interest rate of 7%
- An oil company plans to purchase a piece of vacant land on the corner of two busy streets for $50,000. On properties of this type, the company installs businesses of three different types. Each has an estimated useful life of 15 years. The salvage land for each is estimated to be the $50,000 land cost. Cost* $ 83,000 Type of Business Conventional gas station Add automatic carwash Add quick carwash 195,000 115,000 *Improvements cost does not include $50,000 for the land. Plan A B с Net Annual Income $26,500 39,750 31,200 (a) Construct a choice table for interest rates from 0% to 100%. (b) If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected?The CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota 4Runners for company principals. The purchase price for the Ford Explorer will be $30,750. Annual maintenance costs for the Explorer are expected to be $575 per year more than that of the 4Runner. The purchase price for Toyota 4Runners is 35,250 The trade-in values after 3 years are estimated to be 50% of the first cost for the Explorer and 60% for the 4Runner. (a) What is the incremental ROR between the two vehicles? (b) Provided the firm’s MARR is 15% per year, which vehicle should it buy?Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $38,000, an annual operating cost (AOC) of $10,000, and a service life of 2 years. Method B will cost $79,000 to buy and will have an AOC of $3,000 over its 4-year service life. Method C costs $143,000 initially with an AOC of $3,000 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 6% of its first cost. Perform a future worth analysis to select the method at i= 13% per year. The future worth of method A is $55118 The future worth of method B is $ The future worth of method C is $ Method B is selected.
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