You are the engineering representative on a team for a new product introduction. The proposed manufacturing...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are the engineering representative on a team for a new product introduction. The proposed manufacturing process uses a semi-automated machine along with people. Components for cach unit of the product cost $8 (Note: This is raw material cost for cach unit). The semi-automated machine costs $7,500,000 and it has a 7-year MACRS recovery period. The salvage value is $0 for this specially designed machine. This machine can manufacture 175 units per hour. Required Production Volume (1000's) Year 1 2 3 4 6 7 8 9 Volume 195 275 385 550 625 695 630 550 295 The normal manufacturing operation runs 8 hours per shift per day. Initial production would begin with one shift, 5 days a week. Each working year has 50 weeks (250 regular working days) to allow for vacations. The total labor cost is $50 for each regular time hour that the machine operates and $65 for overtime. The production operation can operate a maximum of 8 extra hours/week, if needed to meet the demand without adding an extra shift. Employee likes to cam "some" overtime. Thus, the overtime option is more desirable than adding a second shift if overtime can meet the demand. Other require information: Corporate MARR 20% (aller tax) Tax Rate 35% Maintenance Cost 12% of raw material cost 2% of raw material Overhead cost (utilities, supervision, marketing, etc.) The decision of whether to release the new product into production requires answers to the following questions (considering planning horizon - 9 years): 1. What average selling price of the finished product would be required to yield a 20% After-Tax rate of return (After-Tax IRR)? You are the engineering representative on a team for a new product introduction. The proposed manufacturing process uses a semi-automated machine along with people. Components for cach unit of the product cost $8 (Note: This is raw material cost for cach unit). The semi-automated machine costs $7,500,000 and it has a 7-year MACRS recovery period. The salvage value is $0 for this specially designed machine. This machine can manufacture 175 units per hour. Required Production Volume (1000's) Year 1 2 3 4 6 7 8 9 Volume 195 275 385 550 625 695 630 550 295 The normal manufacturing operation runs 8 hours per shift per day. Initial production would begin with one shift, 5 days a week. Each working year has 50 weeks (250 regular working days) to allow for vacations. The total labor cost is $50 for each regular time hour that the machine operates and $65 for overtime. The production operation can operate a maximum of 8 extra hours/week, if needed to meet the demand without adding an extra shift. Employee likes to cam "some" overtime. Thus, the overtime option is more desirable than adding a second shift if overtime can meet the demand. Other require information: Corporate MARR 20% (aller tax) Tax Rate 35% Maintenance Cost 12% of raw material cost 2% of raw material Overhead cost (utilities, supervision, marketing, etc.) The decision of whether to release the new product into production requires answers to the following questions (considering planning horizon - 9 years): 1. What average selling price of the finished product would be required to yield a 20% After-Tax rate of return (After-Tax IRR)?
Expert Answer:
Related Book For
Accounting for Decision Making and Control
ISBN: 978-1259564550
9th edition
Authors: Jerold Zimmerman
Posted Date:
Students also viewed these finance questions
-
CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...
-
A client of Park Street's expected a delivery of samples for an event on Friday evening. The order was setup correctly by Park Street, however the vendor that was hired to pick up and deliver the...
-
What is the relationship between interest rates and the length of time to maturity? Figures 13.1 through 13.3 give various yield curves for U.S. Treasury securities. What is the current yield curve...
-
Show that if n is an integer and n3 + 5 is odd, then n is even using a) A proof by contraposition. b) A proof by contradiction.
-
Background inventory data represent average environmental interventions related to a particular material used in a particular industry.Who supplies such information? Why has background inventory data...
-
Examine the following pairs of puts, which differ only by exercise price. Determine whether either of them violates the rules regarding relationships between American options that differ only by...
-
On July 1, 2025, Carla Vista Corporation acquired Sandhill Company for $882,000 cash. At the time of purchase, Sandhill's balance sheet showed assets of $759,500 and liabilities of $245,000. The fair...
-
There are nine common influence tactics you can use to affect and change others behaviors. Research suggests that some tactics are more effective than others. This activity is important because as a...
-
Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided...
-
How do the mission, vision, and strategic focus of an organization shape how human capacity is utilized? How do expand community involvement in organizational efforts? How are constituents trained...
-
What is a annuity? What is a life insurance policy? What is a disability insurance policy? What is a long-term care insurance policy? What is a health savings account? What is a flexible spending...
-
How do financial intermediaries such as hedge funds and private equity firms navigate the complexities of risk management and capital allocation in pursuit of alpha generation and superior returns...
-
What are the distinguishing characteristics of shadow banking institutions, and how do they complement traditional banking entities in facilitating credit intermediation and fostering financial...
-
Give your personal opinion or experience about climate change and geoengineering and what do you think about it. what are you doing to creatively express your moral convictions about this issue? Here...
-
If the amplifier indicated by the box input impedance of oo, which of the following statements are true ? has an open loop gain as well as Feedback factor (\beta = 1/ R_1\) The feedback is voltage...
-
Creative Learning Centers (CLC), a for-profit firm, operates over 100 preschools primarily located in the northeast for children ages 4-6. CLC's innovative curriculum utilizes the latest technology...
-
Maya Jewelry is a not-for-profit firm in Miami that employs recent immigrants from Guatemala to produce Mayan-style jewelry that is sold exclusively in the United States. Profits from Maya Jewelry...
-
You work in the Strategy Analysis department of On-Call, a worldwide paging firm offering satellite- based digital communications through sophisticated pagers. On-Call is analyzing the possibility of...
-
Derive the stiffness matrix of the system shown in Fig. 5.42. 00000 2m 8(t) * 2m ellee x(t) m 00000 FIGURE 5.42 Rigid bar connected to masses and springs.
-
Derive the flexibility matrix of the system shown in Fig. 5.42. 00000 2m 8(t) * 2m ellee x(t) m 00000 FIGURE 5.42 Rigid bar connected to masses and springs.
-
Find the flexibility and stiffness influence coefficients of the system shown in Fig. 6.29. Also, derive the equations of motion of the system. k1 k3 k4 000 /711 000 m2 000 my 000 FIGURE 6.29...
Study smarter with the SolutionInn App