Annual O&MAnnual increase4%0.3Major maintenance 185210(Year 25)Salvage cost3027Javier is an IE at Lobos Manufacturing. He has been studying processline G to determine if an automated system would be preferred to theexisting labor-intensive system. If Lobos wants to earn at least 20%and uses a 15-year planning horizon, which alternative is preferred?Contributed by Paul R. McCright, University of South FloridaLabor Intensive AutomatedInitial cost$0$110,000Installation cost18,500First-year O&M2,0004,800Annual increase450950First-year labor costs72,00047,500Annual increase5%5%Salvage value (EOY15) 2,50020,000In an analysis one alternative has a net present worth of $4200, based5 on a 6-year analysis period that matches its useful life. A 9% interest|rate was used. The replacement will be an identical item with thesame cost, benefits, and useful life. Using a 9% interest rate, computethe net present worth for a 12-year analysis period.ves DifferUse a 10-year analysis period and an 8% interest rate to determinewhich alternative should be selected:AВFirst cost$6500 $12,000Uniform annual benefit $1800 $2000Useful life, in years10

The Net Present Value: The Net Present Value is a capital budgeting technique that measures the net…

Answered: Javier is an IE at Lobos Manufacturing.…

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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Sunland has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 20,000 RecRobos is as follows: Direct materials ($37 per robot) Direct labour ($29 per robot) Variable overhead ($4 per robot) Allocated fixed overhead ($23 per robot) Total Cost $740,000 580,000 --dinthe 80,000 460,000 $1,860,000 Sunland is approached by Sipacore Inc., which offers to make RecRobo for $70 per unit or $1,400,000. Using incremental analysis, determine whether Sunland should accept this offer under each of the following independent assumptions: (1) Assume that $300,000 of the fixed overhead cost is avoidable. (If an amount reduces the net income then enter with a negative sign 15.000-thonic 1150001 14/hilltowaaks monsible imaland fore
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Use the 5-Step Decision Making Process to evaluate the following decision: St. Augustine Bicycles has been manufacturing its own wheels for its bikes. The company is currently operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $3.00 and $3.60 respectively. Normal production is 200,000 wheels per year. A supplier offers to make the wheels at a price of $8 each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated, but the $84,000 of fixed manufacturing overhead currently being charged to the wheels will have to be absorbed by other products. Prepare an incremental analysis for the decision to make or buy the wheels. Should St. Augustine Bicycles buy the wheels from the outside supplier? Clearly identify and label each step. Justify your answer.
Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with tribological (i.e., low friction) properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 15% year, which alternative has the lower present worth? per Method DDM LS First Cost $-200,000 $-40,000 $-500,000 M&O Cost, per Year $-40,000 Salvage Value Life $2,000 $21,000 2 years 4 years The present worth for the DDM method is $ The present worth for the LS method is $ The (Click to select) v method is selected.
Please answer quick in 30 minutes. Prepare a comprehensive report to management highlighting three-year make-or-buy unit cost analysis and recommend appropriate action. What are the other non-cost variables that would be helpful in this analysis? As a manufacturing analyst, you are a member of a make-or-buy review team for electric components and work for a multinational company, TransAll Ltd. Your marketing group estimates the following volumes for a component required for motor assembly: Year 1; 300,000 units, Year 2: 500,000 units, Year 3: 200,000 units. A Chinese supplier has quoted the price as Mu(monetary unit) 0.10 per unit with 10 % price decrease per year for year 2 and 3 for the same component. . Shipping and handling costs are expected to be Mu 0.01 per unit for years 1 through 3. Additional inventory handling charges are Mu 0.005 per unit. In addition, purchasing costs are estimated at Mu 20 per purchase order with a purchase order being released every month for the…
Woodruff Company is currently producing a snowmobile that uses five specialized parts. Engineering has proposed replacing these specialized parts with commodity parts, which will cost less and can be purchased in larger order quantities. Current activity capacity and demand (with specialized parts required) and expected activity demand (with only commodity parts required) are provided. Activities Activity Driver ActivityCapacity Current ActivityDemand Expected ActivityDemand Material usage Number of parts 200,000 200,000 200,000 Installing parts Direct labor hours 20,000 20,000 16,000 Purchasing parts Number of orders 7,600 6,498 3,990 Additionally, the following activity cost data are provided: Material usage: $11 per specialized part used; $27 per commodity part; no fixed activity cost. Installing parts: $21 per direct labor hour; no fixed activity cost. Purchasing parts: Four salaried clerks, each earning a $47,000 annual salary; each clerk is capable of processing 1,900…
You are a head of division in Kinetic Robotics Ltd, a large robotics company, and your team has put together a project proposal to develop a new home robot. The expected NPV of the project is $17.7 million, and the project will require 50 engineers. Your division has a total of 190 engineers available, and the project must compete with the following other projects for these engineering resources:
3. Given: Your boss has asked you to investigate purchasing new machines for a processing line. The demand is 225,000 units/year, and the plant operates for 2080 hrs per year with a desired capacity cushion of 18%.implement to improve planting efficiency. You have found two machines that will fit your needs: 1. Machine 1 produces 60 units/hr, costs $225,000, and lasts 10 years. 2. Machine 2 produces 40 units/hr, costs $245,000, and lasts 20 years. Assume i= 8.0% and the salvage value is $0. Ignore taxes and depreciation Find: a. How many of machine 1 would be required? b. How many of Machine 2 would be required? c. What is the best choice based on engineering economics?
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