A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on different types of this equipment. In the monthly meeting, the purchasing department presented a report about the two types of equipment that they have found. Pertinent data are as follows: Type A Туре В First cost P250,000 P350,000 Annual operating cost 30,000 22,000 Annual labor cost 52,000 34,000 Insurance and property taxes 3% 3% Labor/Payroll taxes 4% 4% Estimated life 10 10 If the minimum required rate of return is 18%,
A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on different types of this equipment. In the monthly meeting, the purchasing department presented a report about the two types of equipment that they have found. Pertinent data are as follows: Type A Туре В First cost P250,000 P350,000 Annual operating cost 30,000 22,000 Annual labor cost 52,000 34,000 Insurance and property taxes 3% 3% Labor/Payroll taxes 4% 4% Estimated life 10 10 If the minimum required rate of return is 18%,
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...
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![A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on different types of this
equipment. In the monthly meeting, the purchasing department presented a report about the two types of equipment that they have
found. Pertinent data are as follows:
Турe A
Туре В
First cost
P250,000
P350,000
Annual operating cost
30,000
22,000
Annual labor cost
52,000
34,000
Insurance and property taxes
3%
3%
Labor/Payroll taxes
4%
4%
Estimated life
10
10
If the minimum required rate of return is 18%,
1. What is the annual worth of Type A? [ Select ]
2. What is the annual worth of Type B? [Select ]
3. Which machine should be selected?[ Select ]
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Transcribed Image Text:A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on different types of this
equipment. In the monthly meeting, the purchasing department presented a report about the two types of equipment that they have
found. Pertinent data are as follows:
Турe A
Туре В
First cost
P250,000
P350,000
Annual operating cost
30,000
22,000
Annual labor cost
52,000
34,000
Insurance and property taxes
3%
3%
Labor/Payroll taxes
4%
4%
Estimated life
10
10
If the minimum required rate of return is 18%,
1. What is the annual worth of Type A? [ Select ]
2. What is the annual worth of Type B? [Select ]
3. Which machine should be selected?[ Select ]
<>
<>
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