A manufacturer has a contract to produce 5,000 units of acertain device. The device can be made by highly trainedworkmen individually and less skilled workmen with the aidof specialized equipment and proper supervision. The highly-trained workmen are paid $20/ hour and each can produceone unit every 2 hours, on the average.The specialized equipment can be placed in operation at the costof $60,000 and it will be worthless after 5,000 units aremanufactured. With this equipment four men paid $15/hr and aforeman paid $25/hr can do the work. All of the five men workingtogether can finish one unit in 15 minutes.Determine the gain or loss if specialized equipment is used.

Manufacturer has a contract to produce units of a device. Highly trained workmen can produce one…

Answered: Determine the gain or loss if…

Business

Economics

Determine the gain or loss if specialized equipment is used.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A manufacturer has a contract to produce 5,000 units of a
certain device. The device can be made by highly trained
workmen individually and less skilled workmen with the aid
of specialized equipment and proper supervision. The highly-
trained workmen are paid $20/ hour and each can produce
one unit every 2 hours, on the average.
The specialized equipment can be placed in operation at the cost
of $60,000 and it will be worthless after 5,000 units are
manufactured. With this equipment four men paid $15/hr and a
foreman paid $25/hr can do the work. All of the five men working
together can finish one unit in 15 minutes.
Determine the gain or loss if specialized equipment is used.

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