SuperSweet Sugar Company was planning to change their packaging but could decide on yet. Their main...

Transcribed Image Text:

♥ SuperSweet Sugar Company was planning to change their packaging but could decide on yet. Their main concern was whether the investment will give the company good rate of return. You were asked to investigate a new system then prepare and present the management a report showing the system with estimated rate of return (ROI). After analyzing you found the new system can replaced 3 manual workers per shift who are currently working with an average hourly pay and benefit of $15, $12, and $8 respectively. The company works 1 8-hour shifts per day for 6 days per week for 48 weeks per year. The new automated system will cost $230,000. Research shows that there will be savings from use of this new system; utility savings from removing associated HVAC system and your estimate is $0.6/hr can be saved on that. You also found there will be savings on indirect labour that was needed to support the manual system, your estimate is $8/shift. Also, you estimated a savings on reduced material handling requirement from the new system which can be $11/shift. However, there will be recurring cost for new systems, maintenance and staffing cost. Maintenance for the new system estimated to $14,100 per year. One new highly skilled operator needed per shift to operate the new system and average wage for skilled operators is $28. Accounting principle and government's revenue agency suggested depreciation reserve is 12%. The new system has a economic life of 6 years. What will be the ROI for the new system? Note: 1-State your answer in % with 2 decimal places, eg: -23.15% 2-Your answer must be within +/- 5% of correct answer ♥ SuperSweet Sugar Company was planning to change their packaging but could decide on yet. Their main concern was whether the investment will give the company good rate of return. You were asked to investigate a new system then prepare and present the management a report showing the system with estimated rate of return (ROI). After analyzing you found the new system can replaced 3 manual workers per shift who are currently working with an average hourly pay and benefit of $15, $12, and $8 respectively. The company works 1 8-hour shifts per day for 6 days per week for 48 weeks per year. The new automated system will cost $230,000. Research shows that there will be savings from use of this new system; utility savings from removing associated HVAC system and your estimate is $0.6/hr can be saved on that. You also found there will be savings on indirect labour that was needed to support the manual system, your estimate is $8/shift. Also, you estimated a savings on reduced material handling requirement from the new system which can be $11/shift. However, there will be recurring cost for new systems, maintenance and staffing cost. Maintenance for the new system estimated to $14,100 per year. One new highly skilled operator needed per shift to operate the new system and average wage for skilled operators is $28. Accounting principle and government's revenue agency suggested depreciation reserve is 12%. The new system has a economic life of 6 years. What will be the ROI for the new system? Note: 1-State your answer in % with 2 decimal places, eg: -23.15% 2-Your answer must be within +/- 5% of correct answer

Answer rating: 100% (QA)

To calculate the ROI for the new system we need to calculate the total cost savings and the total co... View the full answer