Calculate the operating cost per year

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Reference no: EM132201377

Background Info:

Scheduled production per 8-hour shift = 24,000 units

Labor Cost per 8-hour shift = $1800

Benefits per 8-hour shift = 39.2% of labor cost

Annual Production Forecast = 6,240,000 units

We are looking to purchase a piece of equipment that our Engineering Department has recommended. Engineering estimates the proposed equipment will reduce labor and benefit expenses by 7.5%. The additional, annual operating cost for the proposed equipment, including depreciation, energy consumption, and maintenance, is estimated to be $85,000.

Using the background information and assumptions above, calculate the operating cost per year for the existing equipment and the proposed.

Cost of existing equipment for 1 year =

Cost of proposed equipment for 1 year =

What decision would you make? Get the new or keep the old?

SHOW YOUR WORK

Reference no: EM132201377

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