Homework Help is Here – Start Your Trial Now!
Business
Economics
Problem 15.050- Choose between buy and purchase decisions by calculating estimated cost for each decision using time-value of money The Mechanical Components Division manager asks you to recommend a make/buy decision on a major automotive subassembly that is currently purchased externally for a total of $3.9 million this year. This cost is expected to continue rising at a rate of $300,000 per year. Your manager asks that both direct and indirect costs be included when in-house manufacturing (make alternative) is evaluated. New equipment will cost $3.000 million, have a salvage of $0.5 million and a life of 6 years. Estimates of materials, labor costs, and other direct costs are $1.600 million, per year. Typical indirect rates, bases, and expected usage are shown. Perform the AW evaluation at MARR = 12% per year over a 6-year study period. Rate Department Basis X Direct labor cost Y Materials cost $2.550 per dollar $0.50 per dollar Number of Z inspections $20 per inspection Expected Usage $450,000 $875,000 4,500 The annual worth for the make decision is $ The annual worth for the buy decision is $ The make alternative is selected.

Problem 15.050- Choose between buy and purchase decisions by calculating estimated cost for each decision using time-value of money The Mechanical Components Division manager asks you to recommend a make/buy decision on a major automotive subassembly that is currently purchased externally for a total of $3.9 million this year. This cost is expected to continue rising at a rate of $300,000 per year. Your manager asks that both direct and indirect costs be included when in-house manufacturing (make alternative) is evaluated. New equipment will cost $3.000 million, have a salvage of $0.5 million and a life of 6 years. Estimates of materials, labor costs, and other direct costs are $1.600 million, per year. Typical indirect rates, bases, and expected usage are shown. Perform the AW evaluation at MARR = 12% per year over a 6-year study period. Rate Department Basis X Direct labor cost Y Materials cost $2.550 per dollar $0.50 per dollar Number of Z inspections $20 per inspection Expected Usage $450,000 $875,000 4,500 The annual worth for the make decision is $ The annual worth for the buy decision is $ The make alternative is selected.

EBK HEALTH ECONOMICS AND POLICY
EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN:9781337668279
Author:Henderson
Publisher:Henderson
Chapter4: Economic Evaluation In Health Care
Section: Chapter Questions
Problem 7QAP
See similar textbooks
icon
Related questions
Question

Answer in step by step with explanation.

Don't use Ai and chatgpt.

Problem 15.050- Choose between buy and purchase decisions by calculating estimated cost for each decision using time-value of money The Mechanical Components Division manager asks you to recommend a make/buy decision on a major automotive subassembly that is currently purchased externally for a total of $3.9 million this year. This cost is expected to continue rising at a rate of $300,000 per year. Your manager asks that both direct and indirect costs be included when in-house manufacturing (make alternative) is evaluated. New equipment will cost $3.000 million, have a salvage of $0.5 million and a life of 6 years. Estimates of materials, labor costs, and other direct costs are $1.600 million, per year. Typical indirect rates, bases, and expected usage are shown. Perform the AW evaluation at MARR = 12% per year over a 6-year study period. Rate Department Basis X Direct labor cost Y Materials cost $2.550 per dollar $0.50 per dollar Number of Z inspections $20 per inspection Expected Usage $450,000 $875,000 4,500 The annual worth for the make decision is $ The annual worth for the buy decision is $ The make alternative is selected.
Transcribed Image Text:Problem 15.050- Choose between buy and purchase decisions by calculating estimated cost for each decision using time-value of money The Mechanical Components Division manager asks you to recommend a make/buy decision on a major automotive subassembly that is currently purchased externally for a total of $3.9 million this year. This cost is expected to continue rising at a rate of $300,000 per year. Your manager asks that both direct and indirect costs be included when in-house manufacturing (make alternative) is evaluated. New equipment will cost $3.000 million, have a salvage of $0.5 million and a life of 6 years. Estimates of materials, labor costs, and other direct costs are $1.600 million, per year. Typical indirect rates, bases, and expected usage are shown. Perform the AW evaluation at MARR = 12% per year over a 6-year study period. Rate Department Basis X Direct labor cost Y Materials cost $2.550 per dollar $0.50 per dollar Number of Z inspections $20 per inspection Expected Usage $450,000 $875,000 4,500 The annual worth for the make decision is $ The annual worth for the buy decision is $ The make alternative is selected.
Expert Solution
steps

Step by step

Solved in 2 steps with 4 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK HEALTH ECONOMICS AND POLICY
EBK HEALTH ECONOMICS AND POLICY
Economics
ISBN:
9781337668279
Author:
Henderson
Publisher:
YUZU
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Survey Of Economics
Survey Of Economics
Economics
ISBN:
9781337111522
Author:
Tucker, Irvin B.
Publisher:
Cengage,
Micro Economics For Today
Micro Economics For Today
Economics
ISBN:
9781337613064
Author:
Tucker, Irvin B.
Publisher:
Cengage,
SEE MORE TEXTBOOKS