A part is being made by sand casting process. The process needs a furnace that costs...
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A part is being made by sand casting process. The process needs a furnace that costs $20,000 and can serve 10 years with a $1,000 salvage value at the end of its life. Its annual maintenance cost is $1,000. The rate-or-return criterion for the equipment investment is 25%. The machine overhead rate is 30%. This process can produce 5 parts/h. The labor to operate the machine is $10/h with an applicable overhead rate of 50%. The material cost is $6/part, with an overhead rate of 20%. The sale price is $16/part. (a) Use UAC method to formulate the total annual cost of the factory to sand cast this part as the function of the quantity of parts being made. The total cost is the sum of equipment cost, labor cost, material cost and their overheads. (b) Determine the profit break-even point. A part is being made by sand casting process. The process needs a furnace that costs $20,000 and can serve 10 years with a $1,000 salvage value at the end of its life. Its annual maintenance cost is $1,000. The rate-or-return criterion for the equipment investment is 25%. The machine overhead rate is 30%. This process can produce 5 parts/h. The labor to operate the machine is $10/h with an applicable overhead rate of 50%. The material cost is $6/part, with an overhead rate of 20%. The sale price is $16/part. (a) Use UAC method to formulate the total annual cost of the factory to sand cast this part as the function of the quantity of parts being made. The total cost is the sum of equipment cost, labor cost, material cost and their overheads. (b) Determine the profit break-even point.
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years Outflow Inflow Net factor PV 0 20000 20000 10000 2000000 1 1000 1000 08000 80000 2 ... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-1133940593
10th edition
Authors: Belverd E. Needles, Marian Powers, Susan V. Crosson
Posted Date:
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