Problem statementA construction company is planning their projects forthe year 2023. The company is considering theconstruction of 20 buildings, each is 3,000 m². In 2018,they have built 8 similar buildings but with smallerareas, and the material costs associated with those 8buildings are shown in the following table:Building #Area (m²) Cost (S)123456781,430 350,3501,475 358,3261,655 385,9221,790399,3871,961419,0042,015 427,6962,375 456,1262,533 461,765The materials cost index values are as shown in thefollowing table:Year Cost index2017 3212018 3322019 3482020 3682021 3792022 3982023 406In 2019, the company began constructing larger units(3,000 m² units compared to those in 2018 as shown inthe first table). The labor hours required to completethe first 3,000 m² unit was 24,000 hours but the laborhours decreased exponentially with time due to theexperience gained by workers at a 90% learning slopeuntil reaching the 15th unit, after which a steady-statewas reached. Assume the 2023 average labor wage is$20 per hour and the Company's fixed annual cost(overhead) is $2,300,000.(a) What is the breakeven selling price per unit?(b) What is the selling price per unit assuming thecompany wishes to earn 10% profit on top of the totalcosts incurred?

The break even point is defined as the one where the revenue that the firms generate is equal to the…

Problem statement A construction company is planning their projects for the year 2023. The company is considering the construction of 20 buildings, each is 3,000 m². In 2018, they have built 8 similar buildings but with smaller areas, and the material costs associated with those 8 buildings are shown in the following table: Building #Area (m²) Cost (S) 1 1,430 350,350 1,475 358,326 1,655 385,922 1,790 399,387 1,961 419,004 2,015 427,696 2,375 456,126 2,533 461,765 The materials cost index values are as shown in the 23456 3 5 7 8 following table: Year Cost index 2017 321 2018 332 2019 348 2020 368 2021 379 2022 398 2023 406

Problem statement A construction company is planning their projects for the year 2023. The company is considering the construction of 20 buildings, each is 3,000 m². In 2018, they have built 8 similar buildings but with smaller areas, and the material costs associated with those 8 buildings are shown in the following table: Building #Area (m²) Cost (S) 1 1,430 350,350 1,475 358,326 1,655 385,922 1,790 399,387 1,961 419,004 2,015 427,696 2,375 456,126 2,533 461,765 The materials cost index values are as shown in the 23456 3 5 7 8 following table: Year Cost index 2017 321 2018 332 2019 348 2020 368 2021 379 2022 398 2023 406

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

Problem statement
A construction company is planning their projects for
the year 2023. The company is considering the
construction of 20 buildings, each is 3,000 m². In 2018,
they have built 8 similar buildings but with smaller
areas, and the material costs associated with those 8
buildings are shown in the following table:
Building #Area (m²) Cost (S)
1
2
3
4
5
6
7
8
1,430 350,350
1,475 358,326
1,655 385,922
1,790
399,387
1,961
419,004
2,015 427,696
2,375 456,126
2,533 461,765
The materials cost index values are as shown in the
following table:
Year Cost index
2017 321
2018 332
2019 348
2020 368
2021 379
2022 398
2023 406
In 2019, the company began constructing larger units
(3,000 m² units compared to those in 2018 as shown in
the first table). The labor hours required to complete
the first 3,000 m² unit was 24,000 hours but the labor
hours decreased exponentially with time due to the
experience gained by workers at a 90% learning slope
until reaching the 15th unit, after which a steady-state
was reached. Assume the 2023 average labor wage is
$20 per hour and the Company's fixed annual cost
(overhead) is $2,300,000.
(a) What is the breakeven selling price per unit?
(b) What is the selling price per unit assuming the
company wishes to earn 10% profit on top of the total
costs incurred?

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only d,e,f please