Replacement Study The plant manager has asked you to do a cost analysis to determine when currently owned equipment sho...
Chapter 11, Problem 30P (2 Bookmarks) Show all steps ON Problem Replacement Study A presently owned machine has the projected market value and M&O costs shown below. An outside vendor of services has offered to provide the service of the existing machine at a fixed price per year. If the presently owned machine is replaced now, the cost of the fixed-price contract will be $33,000 per year. If the presently owned machine is replaced next year or any time after...
peryear interest, perform a replacement study or an for the two trade-in offers. 9.17 A piece of imaging equipment was purchased two usabl estim seco chase annu com annu pany years ago for $50,000 with an expected useful life of 5 years and a $5000 salvage value. Since its in- stallation performance was poor, it was upgraded for $20,000 one year ago. Increased demand now requires another upgrade for an addition so that it can be used for 3 more...
A mechanical engineer designs and sells equipment that automates manual labor processes. He is offering a machine/robot combination that will significantly reduce labor costs associated with manufacturing garage-door opener transmitters. The equipment has a first cost of $150,000, an estimated annual operating cost of $39,000, a maximum useful life of 5 years, and a $19,000 salvage value anytime it is replaced. The existing equipment was purchased 12 years ago for $65,000 and has an annual operating cost of $78,000. The...
Please help in determinimg the retention and
replacement decisions
EXAMPLE 5 A machine that cost ZAR 120,000 three years ago can be sold now for ZAR 54,000. Its market value for the next 2 years is expected to be ZAR 40,000 and ZAR 20,000 one year and 2 years from now, respectively. Its operating cost was ZARI8,000 for the first 3 years of its life, but the M&O cost is expected to be ZAR 23,000 for the next 2 years....
A presently owned machine has the projected market value and M&O costs shown below. An outside vendor of services has offered to provide the service of the existing machine at a fixed price per year. If the presently owned machine is replaced now, the cost of the fixed-price contract will be $315000 per year. If the presently owned machine is replaced at the end of first year, the contract price will be $292950 per year. If the presently owned machine...
When evaluating whether a currently used machine should be replaced and when the initial cost of acquiring the existing machine (the defender) Select one a. needs to be included with a negative sign, without any discounting, in calculating the present worth of the decision to replace. b. should be forwarded to the future worth as of the current year and included in the project's cash flows. should not be included among the cash flows relevant for making the decision whether...
CONFIDENTIA BFF/BFM/151611/BFF1922 QUESTION 3 (25 MARKS) The projected market value and operation & maintenance (O&M) costs associated with a presently owned machine are shown in Table 3. An outside vendor of services has offered to provide the service of the existing machine at a fixed price per year. If the presently owned machine is replaced now, the cost of the fixed-price contract will be RM330,000 for each of the next 3 years. If the presently owned machine is replaced next...
TDABC Bob Randall, cost accounting manager for Hemple Products, was asked to determine the costs of the activities performed within the company's Manufacturing Engineering Department. The department has the following activities: creating bills of materials (BOMS), studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tools. The resource costs (from the general ledger) and the times to perform one unit of each activity are provided below. Activities Resource Costs Unit Time Driver 0.7 hr. No. of BOMS Salaries Creating...
Companies invest in expansion projects with the expectation of increasing the earnings of its business.Consider the case of Garida Co.:Garida Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs:Year 1Year 2Year 3Year 4Unit sales5,5005,2005,7005,820Sales price$42.57$43.55$44.76$46.79Variable cost per unit$22.83$22.97$23.45$23.87Fixed operating costs except depreciation$66,750$68,950$69,690$68,900Accelerated depreciation rate33%45%15%7%This project will require an investment of $15,000 in new equipment. The equipment will have no salvage value at the end of the project’s four-year life. Garida pays a...
Jose, the IT manager of the company is responsible to maintain a
server for the company’s computer network that would store all of
the company’s private information and allows different departments
to properly communicate. Jose would like to keep the server most up
to date so to prevent any malicious attacks to the IT systems of
the company and facilitate information sharing within the company.
Therefore, he has decided to replace the server at least every two
years.
He has...