Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Question
Chapter 8, Problem 1P
To determine
Identify the production cost and periodic cost.
Expert Solution & Answer
Explanation of Solution
Production cost are those cost that incurred during the manufacturing or purchasing of the goods. Thus, the costs storage and material handling cost for raw material, Lubricant for the machinery,
Periodic cost are those cost that are not involved in the process of manufacturing or purchasing of the goods. Thus, gains or loss from the disposable of asset, depreciation of the company value and leasehold cost are tge periodic costs.
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Students have asked these similar questions
Dime-a-Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $140. The materials cost for a
synthetic diamond is $80. The fixed costs incurred each year for factory upkeep and administrative expenses are $800,000. The
machinery costs $1.12 million and is depreciated straight-line over 10 years to a salvage value of zero.
a. What is the accounting break-even level of sales in terms of number of diamonds sold?
Accounting break-even
diamonds
b. What is the NPV break-even level of sales assuming a tax rate of 35%, a 10-year project life, and a discount rate of 12%?
Note: Do not round intermediate calculations. Round your final answer to the nearest whole number.
NPV break-even level of sales
diamonds
Wood for frames
$ 14,500
Rent for retail store
3,900
Depreciation on office equipment
580
Assembly worker wages
2,450
CEO's salary
3,950
Glue and nails
650
Online sales commissions
1,900
Glass for frames
5,800
Depreciation on factory equipment 1,050
Factory utilities
Stain for frames
600
650
Required:
1. Determine the cost of direct material.
2. Determine the cost of direct labor.
3. Determine the cost of manufacturing overhead.
4. Determine the total manufacturing cost.
5. Determine the total period cost.
6. Determine the total variable cost.
7. Determine the total fixed cost.
8. Determine the total prime cost.
9. Determine the total conversion cost.
Plan A
(Depreciation 3422 ; total anual cost 23922)
Plan B
(Depreciation 4277 ; total anual cost 22857)
Plan C
(Depreciation 7071; total anual cost 24, 891)
Plan D
(Depreciation 7413; total anual cost 22533)
All I need is a solution for the question. Our subject is engineering economics and the lesson is economic study method
Chapter 8 Solutions
Contemporary Engineering Economics (6th Edition)
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