Activity: You and your team came up with a plan to automate the very time-consuming process...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Activity: You and your team came up with a plan to automate the very time-consuming process of manual welding by using robotic welders. First, compute how this would increase productivity. Output (sales, in $million) Labor (payroll, in $million) Capital (expenses, in $million) One-time capital investment ($million) Change in Productivity= Year 1 $120 $32 Change in sales from Year 1 to Year 2= Change in labor cost from Year 1 to Year 2 = $45 $10 Productivity Year 1 1.56 Year 2 $160 $26 $45 $-0 Productivity Year 2 2.25 Next, using just the first year benefits (no amortization/depreciation), what is the ROI for this investment? Change in capital cost from Year 1 to Year 2 = Investment required to create this change = ROI = Based on these results, is this project a good idea or not? ROI Tip: The ROI, or Return on Investment, calculation here is already set-up for you. The formula looks at values in the Year 1, Year 2 and Annual Inflation columns. When answering the question if this project is a good idea or not, remember that a value of greater than 1, implies you do make money on your investment (i.e. you have a positive ROI). Productivity Tip: To calculate the "productivity," we need to divide the output, over all of our investment (all labor + capital). Like seen in the formula below! Productivity output capital + labor Change in Productivity Tip: Change in productivity has us look at what (if any) change do we see year over year. As this is a %, we should subtract the next year, from the previous year, then divide that by the previous year. That way we can see the Change in Productivity next year previous year previous year ROI Tip: The ROI is the Return on Investment. Your formula will look at values in the Year 1, Year 2 and Annual Inflation columns. When answering the question if this project is a good idea or not, remember that a value of greater than 1, implies you do make money on your investment (i.e. you have a positive ROI). ROI Formula Tip: ROI = Net Return on Investment Cost of Investment (Net return is the output - labor - capital. Net is the change from Year 1 to Year 2.) (Include only those costs unique to the investment) Activity: You and your team came up with a plan to automate the very time-consuming process of manual welding by using robotic welders. First, compute how this would increase productivity. Output (sales, in $million) Labor (payroll, in $million) Capital (expenses, in $million) One-time capital investment ($million) Change in Productivity= Year 1 $120 $32 Change in sales from Year 1 to Year 2= Change in labor cost from Year 1 to Year 2 = $45 $10 Productivity Year 1 1.56 Year 2 $160 $26 $45 $-0 Productivity Year 2 2.25 Next, using just the first year benefits (no amortization/depreciation), what is the ROI for this investment? Change in capital cost from Year 1 to Year 2 = Investment required to create this change = ROI = Based on these results, is this project a good idea or not? ROI Tip: The ROI, or Return on Investment, calculation here is already set-up for you. The formula looks at values in the Year 1, Year 2 and Annual Inflation columns. When answering the question if this project is a good idea or not, remember that a value of greater than 1, implies you do make money on your investment (i.e. you have a positive ROI). Productivity Tip: To calculate the "productivity," we need to divide the output, over all of our investment (all labor + capital). Like seen in the formula below! Productivity output capital + labor Change in Productivity Tip: Change in productivity has us look at what (if any) change do we see year over year. As this is a %, we should subtract the next year, from the previous year, then divide that by the previous year. That way we can see the Change in Productivity next year previous year previous year ROI Tip: The ROI is the Return on Investment. Your formula will look at values in the Year 1, Year 2 and Annual Inflation columns. When answering the question if this project is a good idea or not, remember that a value of greater than 1, implies you do make money on your investment (i.e. you have a positive ROI). ROI Formula Tip: ROI = Net Return on Investment Cost of Investment (Net return is the output - labor - capital. Net is the change from Year 1 to Year 2.) (Include only those costs unique to the investment)
Expert Answer:
Answer rating: 100% (QA)
To compute the increase in productivity from using robotic welders we can calculate the change in ou... View the full answer
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
Posted Date:
Students also viewed these finance questions
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Natureview Farm It was a crisp Vermont morning in February 2000. Christine Walker, vice president of marketing for Natureview Farm, Inc., a small yogurt manufacturer, paused to collect her thoughts...
-
a. Firm A has a margin of 14%, sales of $640,000, and ROI of 18%. Calculate the firm's average total assets. b. Firm B has net income of $72,000, asset turnover of 1.40, and average total assets of...
-
(a) The two signal constellations shown in Figure exhibit the same average ability of symbol error. Justify the validity of this statement. (b) Which of these two constellations has minimum average...
-
In light of the ever- changing external environment, what adjustments would you make in the basic approach to strategic planning to keep it relevant? Why?
-
Vision Equipment reported the following items on February 28, 2010 (amounts in thousands, with last years amounts also given as needed): Accounts Payable.. $ 449 Accounts Receivable, Net: Cash. 215...
-
There is no clear definition of corporate social reporting (CSR). The European Com-mission defines CSR as "the responsibility of enterprises for their impacts on society." In the United States, there...
-
Oriole Company sold $3,140,000, 9%, 10-year bonds on January 1, 2025. The bonds were dated January 1, 2025, and pay interest on January 1. The company uses straight-line amortization on bond premiums...
-
During a baseball practice session, the cutoff man A executes a throw to the third baseman B. If the initial speed of the baseball is v 0 = 130 ft/sec, what launch angle is best if the ball is to...
-
Imagine that you are working as a manager in a manufacturing firm, select an example of a problem that may arise in your area of work, and present to your group on how you would support your team in...
-
Calculate the cost of the inventory on January 31, under the LIFO method. Bramble Bookstore had 520 units on hand on January 1, costing $9 each. Purchases and sales during the month of January were...
-
If you were the editor of a newspaper would you have published pictures of "the falling man" picture the day after September 11 and that of the woman feeding a dog on a bridge with a dead body...
-
DB Company issued $ 2 0 0 , 0 0 0 , 0 0 0 of 8 % 2 0 - year bonds at 1 0 1 on 1 / 1 / 2 3 to yield 7 . 5 % . Interest is paid on June 3 0 and December 3 1 . Using effective - interest amortization,...
-
In Ontario, British Columbia, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, and the federal jurisdiction, labour relations boards have the authority to certify a union as the bargaining...
-
A worker pushes a heavy box with a force of 250 N at an angle = 38 below horizontal as shown. The box slides on level ground over a distance of 50 m. A friction force of 160 N acts on the box during...
-
Question 2 Q.2.1 Q.2.2 Q.2.3 Create an infographic illustrating the CMMI model. Include a description of each (10) maturity level and an example that is relevant. You may use any tool of your choice...
-
How can NAFTA be beneficial to suppliers of Walmart?
-
Which one of the following is not part of the master budget of a manufacturing firm? a. Sales budget b. Depreciation budget c. Production budget d. Direct labor budget e. Selling and administrative...
-
Krohn Company is producing an exception report. One division had $47,500 in budgeted costs, but it actually spent $45,000. How would this variance appear on the exception report?
-
How much will profits increase for every unit sold over the break-even point?
-
In the chapter introduction, we presented gas mileage data for 2016 model year hybrid and small non-hybrid cars. We will use histograms and back-to-back stem-and-leaf plots to compare the mileages...
-
Time-series data are discrete when observations are made at regularly spaced time intervals. The time-series data sets in this chapter are all discrete. Time-series data are continuous when there are...
-
Find examples of graphs in newspapers, magazines, or on the Internet that are misleading in some way. Explain how they are misleading. Then find some that present accurate comparisons and explain why...
Study smarter with the SolutionInn App