Southern Environmental Consulting (SEC), Inc. designs plans and specifications for asbestos abatement (removal) projects in public,...
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Southern Environmental Consulting (SEC), Inc. designs plans and specifications for asbestos abatement (removal) projects in public, private, and government buildings. Currently, SEC must conduct an air test before allowing the occupancy of a building after the asbestos has been removed. SEC subcontracts air-test samples to a laboratory for analysis by transmission electron microscopy (TEM). To offset the cost of TEM analysis, SEC charges its clients $50 more than the subcontractor's fee. The only expenses in this system are the costs of shipping the air-test samples to the subcontractor and the labor involved in shipping the samples. With the growth of the business, SEC must consider either continuing to subcontract the TEM analysis to outside companies or developing its own TEM laboratory. Because of the passage of the Asbestos Hazard Emergency Response Act (AHERA) by the U.S. Congress, SEC expects about 1,000 air-sample tests per year over eight years. The firm's MARR is known to be 11%. Click the icon to view the description of alternatives. Click the icon to view the interest factors for discrete compounding when MARR = 11% per year. (a) Determine the cost of an air-sample test by the TEM laboratory (in-house). The unit cost is $ (Round to the nearest cent.) Subcontract option. The client is charged $400 per sample, which is $50 above the subcontracting fee of $350. Labor expenses are $1,900 per year, and shipping expenses are estimated to be $0.50 per sample. TEM purchase option. The purchase and installation cost for the TEM is $406,000. The equipment would last for eight years, at which time it would have no salvage value. The design and renovation cost is estimated to be $9,400 and it is paid only once along with the installation cost. The client is charged $350 per sample based on the current market price. One full-time manager and two part-time technicians are needed to operate the laboratory. Their combined annual salaries will be $56,000. Material required to operate the lab includes carbon rods, copper grids, filter equipment, and acetone. The costs of these materials are estimated at $8,000 per year. Utility costs, operating and maintenance costs, and the indirect labor needed to maintain the lab are estimated at $13,000 per year. The extra income-tax expenses would be $30,000. Single Payment Compound Present Compound Sinking Present Amount Worth Amount Fund Worth Factor Factor Factor Factor Factor Equal Payment Series Capital Recovery Factor N (F/P, i, N) (P/F, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) (A/P, i, N) 1 1.1100 0.9009 1.0000 1.0000 0.9009 1.1100 234 2 1.2321 0.8116 2.1100 0.4739 1.7125 0.5839 1.3676 0.7312 3.3421 0.2992 2.4437 0.4092 1.5181 0.6587 4.7097 0.2123 3.1024 0.3223 5 1.6851 0.5935 6.2278 0.1606 3.6959 0.2706 678 1.8704 0.5346 7.9129 0.1264 4.2305 0.2364 2.0762 0.4817 9.7833 0.1022 4.7122 0.2122 2.3045 0.4339 11.8594 0.0843 5.1461 0.1943 9 2.5580 0.3909 14.1640 0.0706 5.5370 0.1806 10 2.8394 0.3522 16.7220 0.0598 5.8892 0.1698 Southern Environmental Consulting (SEC), Inc. designs plans and specifications for asbestos abatement (removal) projects in public, private, and government buildings. Currently, SEC must conduct an air test before allowing the occupancy of a building after the asbestos has been removed. SEC subcontracts air-test samples to a laboratory for analysis by transmission electron microscopy (TEM). To offset the cost of TEM analysis, SEC charges its clients $50 more than the subcontractor's fee. The only expenses in this system are the costs of shipping the air-test samples to the subcontractor and the labor involved in shipping the samples. With the growth of the business, SEC must consider either continuing to subcontract the TEM analysis to outside companies or developing its own TEM laboratory. Because of the passage of the Asbestos Hazard Emergency Response Act (AHERA) by the U.S. Congress, SEC expects about 1,000 air-sample tests per year over eight years. The firm's MARR is known to be 11%. Click the icon to view the description of alternatives. Click the icon to view the interest factors for discrete compounding when MARR = 11% per year. (a) Determine the cost of an air-sample test by the TEM laboratory (in-house). The unit cost is $ (Round to the nearest cent.) Subcontract option. The client is charged $400 per sample, which is $50 above the subcontracting fee of $350. Labor expenses are $1,900 per year, and shipping expenses are estimated to be $0.50 per sample. TEM purchase option. The purchase and installation cost for the TEM is $406,000. The equipment would last for eight years, at which time it would have no salvage value. The design and renovation cost is estimated to be $9,400 and it is paid only once along with the installation cost. The client is charged $350 per sample based on the current market price. One full-time manager and two part-time technicians are needed to operate the laboratory. Their combined annual salaries will be $56,000. Material required to operate the lab includes carbon rods, copper grids, filter equipment, and acetone. The costs of these materials are estimated at $8,000 per year. Utility costs, operating and maintenance costs, and the indirect labor needed to maintain the lab are estimated at $13,000 per year. The extra income-tax expenses would be $30,000. Single Payment Compound Present Compound Sinking Present Amount Worth Amount Fund Worth Factor Factor Factor Factor Factor Equal Payment Series Capital Recovery Factor N (F/P, i, N) (P/F, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) (A/P, i, N) 1 1.1100 0.9009 1.0000 1.0000 0.9009 1.1100 234 2 1.2321 0.8116 2.1100 0.4739 1.7125 0.5839 1.3676 0.7312 3.3421 0.2992 2.4437 0.4092 1.5181 0.6587 4.7097 0.2123 3.1024 0.3223 5 1.6851 0.5935 6.2278 0.1606 3.6959 0.2706 678 1.8704 0.5346 7.9129 0.1264 4.2305 0.2364 2.0762 0.4817 9.7833 0.1022 4.7122 0.2122 2.3045 0.4339 11.8594 0.0843 5.1461 0.1943 9 2.5580 0.3909 14.1640 0.0706 5.5370 0.1806 10 2.8394 0.3522 16.7220 0.0598 5.8892 0.1698
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