Where D8 = 2

Question 2 (a) Classify the following ten items as either direct (D) or indirect (I) cost elements for a factory. (5 marks) 1. IT staff 2. Trucks 3. Statistical Process Control training 4. The secretary of the project manager 5. Technicians of a specific production line 6. Quality Assurance staff 7. Photocopier 8. Stamping machine 9. Spare parts in store room 10. Screw driver tools (b) Recently, an American manufacturer, TSNA Electric Cars, setup a factory in Shanghai. The management saw a competitor, DSLY Automobile, was operating factories both in Shanghai and Hong Kong, and earned a lot. The TSNA management wondered whether they should adopt a similar strategy to establish a factory in Hong Kong too. So, they can penetrate new markets in South East Asia. Assume you are applying a post as TSNA engineer. During your interview, the management invites your opinions for the above issue. Briefly describe your opinions in terms of the Seven Principles of Engineering Economics. (7 marks) (c) A computer manufacturer sets up a production line A in 2015 for totally $1,000,000, with the following cost ratio and index. Cost element Average % in total cost Index (2015) Index forecasted (2020) Machines 60 170 220 + D8 Materials 30 168 188 + D8 Labours 10 140 160 + D8 If we would like to set up a similar production line B in 2020, what are the weighted indices for Year 2015 and 2020 (Round off your answer to 1 decimal place), and budget estimate for the total cost in Year 2020 (round off your answer to integer)? (6 marks)