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HA1-R12 (Home assignment #1 based on theRIchärdsbookOhipterawmarehouseoostn Calculate answers to all the questions below. Then go to Assessments Quizzes on Western Online and enter the answers into HA1-R12. Each answer is worth 2 points. You will have two attempts. Exercise 1. RO A warehouse manager is considering purchasin g an electric forklift for loading/unloading and handling of pallets on the dock, the operations that are currently performed with a hand pallet truck. The cost of a forklift is $20,000 and a one-time charging station set-up cost is $5,000. The useful life of the forkift is 5 years. The labor productivity improvement will save the warehouse $16,000 per year in labor costs. Additionally, faster loading and unloading of trucks will translate into better truck utilization and bring $4,000 per year in savings 1. What is the payback period in months? 2. What is the ROl over the 5-year life of this equipment in percent? Exercise 2. Overhead A 3PL warehouse provides contract services to 3 customers: A, B and C. The direct annual costs of the whole warehouse are as follows Space- $2,000,000; Labor-$800,000; MHE (material handling equipment)-$200,000 Total overhead is $600,000. There is space for 10,000 pallet locations split between The total labor hours per year are 50,000; they are split between the customers as follows: A- and C-10%. MHE is used to serve the customers in the same proportions as labor 3. What is the rate of overhead in percent? the customers as follows: A-50%-25% and C 25% 50%:8-40%, 4. What is the average warehouse labor rate per hour with overhead in dollars and cents? 5. What is the share of customer B in total overhead contribution as a percentage? 6. What is the amount in total overhead contribution of customer A in whole dollars? much overhead in dollars will remain undistributed if customer C reduces its storage needs by 20% and 7. How handling (ie, labor and MHE use) by 10%. Exercise 3. Activity-based vs. traditional costing Please use table 12.4 on page 355 of the Richards book for this exercise. Assume that it represents an accurate picture of costs in the warehouse by customer based on activities. Now let's compare it to traditional costing. 8. If under tradition pallets) and not to handling cost drivers (labor and MHE), which customer would be getting the most (the highest number of free, unpaid management hours)? al costing all management overhead A were allocated only to storage space (number of

Answer 1

	Initial Investment:
	Forklif	$20,000
	Charging Station	$5,000
	Total initial investment	$25,000
	Annual saving from labor productivity	$16,000
	Annual saving from truck utilization	$4,000
	Total Annual savings	$20,000
	Payback Period in years	1.25	(25000/20000)
	Payback Period in Months	15	(1.25*12)
	ROI (Return on investment)	0.8	(20000/25000)
	ROI (Return on investment in percent)	80%
	AsHOMEWORKLIB Guideline, in order tooptimize resources, experts are required to answer one question
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