Your company is an established engineering contractor for TNB. Your job is to install an underground cable which has two alternatives of sites, A and B. The underground cable with estimation cost of RM 240 per meter will be installed from the TNB 3 Distribution Power Station to the job locations. Details of the factors for the two (4) sites are as shown in Table Q3 below. Table 3: Details of the altemative sites COST FACTOR SITE A 1 km RM3,000 SITE B 1.5 km Average Cabling Distance Monthly Rental Cost for Setting Up and Removal of Equipment Plant Cabling Costs Flag Person Authority Permit RM5,000 RM30,000 RM20,000 RM240/meter RM240/meter RM180 per day RM3,720 N/A RM2.480 The job requires 10,000 meters per km cabling material. Your company is given 12 weeks (6 working days per week) to complete the job. Installed cable will be paid (selling price) RM410 per meter. (a) List fixed and variable costs factor given in Table 3. (b) Calculate all fixed, variable and total costs for both sites A and B. (c) Explain the site you will choose if you have limited fund to invest.
Your company is an established engineering contractor for TNB. Your job is to install an underground cable which has two alternatives of sites, A and B. The underground cable with estimation cost of RM 240 per meter will be installed from the TNB 3 Distribution Power Station to the job locations. Details of the factors for the two (4) sites are as shown in Table Q3 below. Table 3: Details of the altemative sites COST FACTOR SITE A 1 km RM3,000 SITE B 1.5 km Average Cabling Distance Monthly Rental Cost for Setting Up and Removal of Equipment Plant Cabling Costs Flag Person Authority Permit RM5,000 RM30,000 RM20,000 RM240/meter RM240/meter RM180 per day RM3,720 N/A RM2.480 The job requires 10,000 meters per km cabling material. Your company is given 12 weeks (6 working days per week) to complete the job. Installed cable will be paid (selling price) RM410 per meter. (a) List fixed and variable costs factor given in Table 3. (b) Calculate all fixed, variable and total costs for both sites A and B. (c) Explain the site you will choose if you have limited fund to invest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Your company is an established engineering contractor for TNB. Your job is to install
an underground cable which has two alternatives of sites, A and B. The underground
cable with estimation cost of RM 240 per meter will be installed from the TNB
3
Distribution Power Station to the job locations. Details of the factors for the two 14)
sites are as shown in Table Q3 below.
Table 3: Details of the alternative sites
COST FACTOR
SITE A
1 km
SITE B
Average Cabling Distance
Monthly Rental
Cost for Setting Up and Removal of
Equipment
Plant Cabling Costs
Flag Person
Authority Permit
1.5 km
RM3,000
RM5,000
RM30,000
RM20,000
RM240/meter
RM240/meter
RM180 per day
N/A
RM2,480
RM3,720
The job requires 10,000 meters per km cabling material. Your company is given 12
weeks (6 working days per week) to complete the job. Installed cable will be paid
(selling price) RM410 per meter.
(a)
List fixed and variable costs factor given in Table 3.
(b)
Calculate all fixed, variable and total costs for both sites A and B.
(c)
Explain the site you will choose if you have limited fund to invest.
Calculate the length of the cables you have to install before you start making a
profit from the chosen site in (c), if total revenue (TR) is equal to total cost
(TC).
(d)
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