Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 3, Problem 18P
To determine
Calculate the estimated hour.
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Students have asked these similar questions
For the following problem, what would be the objective function that aims at minimizing the total cost considering that X1, X2, X3, and X4 are the
number of units produced and sold of Products 1, 2, 3, and 4, respectively?
Manufacturing time (hr) per unit
Machine Cost per hr ($)
Product 1 Product 2
Product 3
Product 4
Capacity (hr).
10
2
4
2
500
5
3
1
2
380
4
7
1
450
Unit selling
price ($)
75
45
O a. 20X1+30X2+40X3+20X4
O b. None of the answers
OC. 75X1+70X2+55X3+45X4
Od. 63X1+52X2+53X3+34X4
123
دي دا فيا
70
2
55
A company sells one of the items in its product line for $8.90 each. The variable costs
per unit is $3.90, and the associated fixed costs per week are $2,200. If the total
revenue is $9,434 per week, then determine each of the following quantities:
(1) The weekly level of output (n), that is the number of items produced and sold, is
units.
(2) The total variable costs (TVC) per week is $
(3) The net income (NI) per week is $
(4) The break-even volume (nBE) per week is
even volume is not an integer, round up to the next integer.)
units. (Hint: If the break-
(5) The break-even revenue (TRBE) per week, rounded to the nearest cent, is $
A study of 86 savings and loan associations in six northwestern states yielded the following cost function.
C�
=
3.69
-
0.007999Q�
+
0.000005359Q2�2
+
25.0X1�1
(3.69)
(3.08)
(3.42)
(3.50)
where C� = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent.
Q� = output; measured by total assets ($ million)
X1�1 = ratio of the number of branches to total assets ($ million)
Note: The number in parentheses below each coefficient is its respective t-statistic.
Holding constant the effects of bank branching (X1�1), what is the level of total assets that minimizes the average operating expense ratio?
$746.31 million
$1,562.70 million
$1,492.63 million
$461.31 million
What is the average operating expense ratio for a savings and loan association with the level of total assets determined in the previous part and 1 branch?…
Chapter 3 Solutions
Engineering Economy
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prepare a composite (weighted) index for housing...Ch. 3 - Prepare a composite (weighted) index for housing...Ch. 3 - Prob. 10P
Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - A biotech firm is considering abandoning its old...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 28SECh. 3 - Prob. 31CSCh. 3 - Prob. 32CSCh. 3 - Prob. 36FECh. 3 - Prob. 37FECh. 3 - Prob. 38FECh. 3 - Prob. 39FECh. 3 - Prob. 40FECh. 3 - Prob. 41FE
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- 1. Exercise 9.1 A study of 86 savings and loan associations in six northwestern states yielded the following cost function. C 2.38 (3.33) 0.006153Q (3.08) 0.000005359Q² (3.16) 19.2X₁ (2.96) where C = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q = output; measured by total assets ($ million) X₁ = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Which of the variable(s) is (are) statistically significant in explaining variations in the average operating expense ratio? (Hint: £0.025,70 = 1.99.) Check all that apply. Q2 What type of average cost-output relationship is suggested by these statistical results? ○ Cubic Linear Quadratic Based on these results, what can we conclude about the existence of economies or diseconomies of scale in savings and loan associations in the…arrow_forwardA recent engineering was given the job of determining the best production rate for a new type of casting in a foundry. After experimenting with many combinations of hourly production rates and total production cost per hour, he summarized his findings in table below (column 2). The engineering then talked to the firm’s marketing specialist, who provided estimates of selling price per casting as a function of production output (see table 1 column 3). There are 8,760 hours in a year. What production rate would you recommend to maximize total profits per year? a) 100 ; b) 200 ; c) 300 ; d) 400 ; e) 500 show the computation how to solve it.arrow_forwardA recent engineering was given the job of determining the best production rate for a new type of casting in a foundry. After experimenting with many combinations of hourly production rates and total production cost per hour, he summarized his findings in table below (column 2). The engineering then talked to the firm’s marketing specialist, who provided estimates of selling price per casting as a function of production output (see table 1 column 3). There are 8,760 hours in a year. What production rate would you recommend to maximize total profits per year? a) 100 ; b) 200 ; c) 300 ; d) 400 ; e) 500 Show handwritten solutions.arrow_forward
- 1. Exercise 9.1 A study of 86 savings and loan associations in six northwestern states yielded the following cost function. 2.38 0.006153Q 0.000005359Q² 19.2X1 C + + (2.62) (2.84) (3.16) (3.50) where C = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q = output; measured by total assets ($ million) X1 = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Which of the variable(s) is (are) statistically significant in explaining variations in the average operating expense ratio? (Hint: t0.025,7€ 1.99 .) Check all that apply. X1 Q2 What type of average cost-output relationship is suggested by these statistical results? Quadratic Linear Cubic Based on these results, what can we conclude about the existence of economies or diseconomies of scale in savings and loan associations in…arrow_forward2. Exercise 9.2 A study of 86 savings and loan associations in six northwestern states yielded the following cost function. C 3.41 (3.41) 0.007384Q (2.84) 0.000005359Q2 (3.16) 23.0X1 (3.23) where C = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q = output; measured by total assets ($ million) X₁ = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Holding constant the effects of bank branching (X1), what is the level of total assets that minimizes the average operating expense ratio? $1,557.42 million O $688.93 million $461.81 million $1,377.87 million What is the average operating expense ratio for a savings and loan association with the level of total assets determined in the previous part and 1 branch? 1.18% 0.90% 4.94% 3.44% What is the ratio with 10 branches instead?…arrow_forwardA study of 86 savings and loan associations in six northwestern states yielded the following cost function. C = 3.12 - 0.006768Q + 0.000005359Q2 +21.1X1 (3.12) (2.61) (2.89) (2.96) where C = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q = output; measured by total assets ($ million) X1 = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Holding constant the effects of bank branching (X1), what is the level of total assets that minimizes the average operating expense ratio? $1,262.92 million $1,558.81 million $631.46 million $460.99 million What is the average operating expense ratio for a savings and loan association with the level of total assets determined in the previous part and 1 branch? 1.17% 3.15% 1.02% 5.63% What is the ratio with 10 branches instead? 5.93% 1.47%…arrow_forward
- A study of 86 savings and loan associations in six northwestern states yielded the following cost function. C� = 2.38 - 0.006153Q� + 0.000005359Q2�2 + 19.2X1�1 (2.86) (3.08) (3.68) (2.96) where C� = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q� = output; measured by total assets ($ million) X1�1 = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Which of the variable(s) is (are) statistically significant in explaining variations in the average operating expense ratio? (Hint: t0.025,70=1.99�0.025,70=1.99.) Check all that apply. Q� Q2�2 X1�1 What type of average cost-output relationship is suggested by these statistical results? Quadratic Cubic Linear Based on these results, what can we…arrow_forwardDerive (Mathematically and graphically) the cost minimization condition.arrow_forwardYour boss is the director of reporting for the Athens County Construction Agency (ACCA). It has been his job to track the cost of construction in Athens County. Twentyfive years ago, he created the ACCA Cost Index to track those costs. Costs during the first year of the index were $14 per square foot of constructed space (the index value was set at 100 for that first year). This year a survey of contractors revealed that costs were $70 per square foot. (a) What index number will your boss publish in his report for this year? (b) If the index value was 500 last year, what was the cost per square foot last year?arrow_forward
- Cost, revenue, and profit are in dollars and x is the number of units. If the daily marginal cost for a product is MC = 4x + 100, with fixed costs amounting to $700, find the total cost function for each day. C(x) = %3Darrow_forwardList all the variable constraints to this problem and show step by step to input into excel to get a sensitivity reportarrow_forwardIdentify each of the following costs associated with owning an automobile as direct (D) or indirect (I). Assume a direct cost is one that is directly attributable to the number of miles driven. (a) License plate, (b) Drivers license, (c) Gasoline, (d) Highway toll fee, (e) Oil change, ( f ) Repairs after collision, (g) Gasoline tax, (h) Monthly loan payment, (i) Annual inspection fee, and ( j ) Garage rental.arrow_forward
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