How to examine maintenance cost

Reference no: EM13175702

A manufacturing plant is planning to replace outdated equipment with more energy-efficient and environmental-friendly equipment. Two models are under consideration. Model A is sold for $159,000 and can produce at an optimum speed of 78 unit/hour. Model B is sold for the same price, but can produce at an optimum speed of 76 unit/hour. Model A requires 6 hours of maintenance for every 4300 units produced, while Model B requires 5 hours of maintenance for every 3300 units. The maintenance cost for both models is $100 per hour. The variable operating cost is $346 per hour for Model A and $290 per hour for Model B. Due to obsolete parts, there is a sunk cost of $2700 for model A and $1900 for Model B . Assume the price of the product is $150 per unit and the company expects to sell 145,000 units each year. From the context of comparing Model A vs. Model B, what would be the cost of going with Model A for 145,000 units/year.

Reference no: EM13175702

Questions Cloud

Determine the real gdp for a year : If the nominal GDP is $559 billion in the base year, and it rises to 577 in year 1, and 605 in year 2, what is the real GDP in each year, given that the price index has risen from 100 in the base year to 104.5 in Year 1 and up to 108.3 in Year 2?

How the announcement to affect the value of the bond : Today, the Federal Reserve announced that it is reducing the discount rate by 0.5%. How would you expect this announcement to affect the value of your bond?

What are the macroeconomic policies : If you are the chief economist of a country experiencing high unemployment and flat GDP, what macroeconomic policies might you enact in response to these economic conditions? How would you expect these policy changes to impact the economy?

Does physiotherapy visits yield 10 additional healthy days : a. If Mrs Siegal can only choose one alternative, and if she wants to maximize the most healthy days per dollar that she gets, which option will she choose? b. If the price of a pill ncreases to $3, which option will she choose?

How to examine maintenance cost : The maintenance cost for both models is $100 per hour. The variable operating cost is $346 per hour for Model A and $290 per hour for Model B. Due to obsolete parts, there is a sunk cost of $2700 for model A and $1900 for Model B.

What is the selling price for the product : A manufacturing company leases a machine for $31,812 per year. Each unit produced costs $36 in labor and $72 in materials. To break even, 21,000 units must be sold. What is the selling price for the product

Explain national bureau of economic research : According to the National Bureau of Economic Research, a poor family is the one whose income falls below one-half of the median family income. Using this definition of poverty, answer the following questions. a) How, if at all, would the proportio..

How to improve one-time additive : A producer of synthetic motor oil for automobiles and light trucks has made the following statement: "One quart of Dynolube added to your next oil change will increase fuel mileage by one percent.

What is the optimum thickness of the insulation : The cost for loss of heat from the pipe per meter is $4.8/X1/2 per year. Here, X represents the thickness of insulation in meters, and X is a continuous design variable.

User Account

All Pages