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IENG377 Engineering Economy Case Study: Mountaineer Manufacturin You are starting a manufacturing company in Pittsburgh, Pa Given the following information, what are the projected income statements for this company for the next 5 years? Management/Administration cost: CEO (Your Salary) $150,000 VP Marketing $100,000 VP Sales Chief Technology Officer $100,000 VP Operations $100,000 Other Administration Personnel Salary Combined: 400,000 125,000 Benefits for above personnel: Add 40% of total salary Inflation: Above salaries are for year 1 . These go up by inflation of 2%/year Total Salary Total Salary + Benefits Year Year 1 Year 2 Year 3 Year 4 Year 5 Facilities: Lease Plum Industrial Court Building. 20,000 sq.ft. @ $16/sq.ft. per vear Included rent and utilities. Lease remains the same over the next 5 years. Depreciation of Machinery: Purchase 5 different automated machines for flexible work cell. The total cost of the machines is spread out over 5 years per IRS rules. Use numbers in chart below for total year by year depreciation in income statement. Year Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation 80000 150000 140000 140000 80000

Sales Forecast: Year Units Forecast 10000 20000 25000 30000 35000 Revenue Forecast unit a $630 per Year 1 Year 2 ear 3 Year 4 Year 5 Direct Product Costs: Per unit labor $210 Assume per unit cost remains the same over the next 5 years Per unit material $310 Assumeper unit remains the same over the next 5 years Units Horecast 10000 20000 25000 Year Direct Labor Cost Direct Material Cost Year 1 Year 2 Year 3 Year Year 5 35000 Tax rate Take off 40% of Before Tax Income as taxes (Put in Less Taxes row) Tax rate represents a combination of federal and state taxes. Assume tax-0, if there is no income or a loss Fill out income statement table below for the next 5 years below: Year Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Management/Administration Cost Facilities Cost Product Costs: Direct Labor Cost Direct Material Cost Depreciation Cost Total Costs Before Tax Income Less Taxes After Tax income

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Year 35, 2,20,50,000 Projected income statements Year 4 Year Year 2 Year 3 30,000 units 10,000 units Units forcast 1,89,00,000 1,26,00,000 1,57,50,000 A Revenue $ 2,434,536.00 2,483,227.00 2,532,891.00 $ 2,340,000.00 $ 2,386,800.00 Management/Administration cost (Note:1 Facilities cost (Lease rent of 20,000 sq.ft@$16) $320,000.00$ 320,000.00 320,000.00 320,000.00 320,000.00 duct cost Direct Labor Cost ($ 210 per unit) Direct Material cost(S 310 per unit Depreciation cost (Given $ 2,100,000.00 $ 4,200,000.00 $ 5,250,000.00$ 6,300,000.00 $ 7,350,000.00 $ 3,100,000.00 $ 6,200,000.00$ 7,750,000.00$ 9,300,000.00 $10,850,000.00 $80,000.00 $ 150,000.00$ 140,000.00$140,000.00$80,000.00 $ 7,940,000.00 $ 13,256,800.00 $15,894,536.00 $18,543,227.00 $21,132,891.00 B Total cost $ (1,640,000.00)S (656,800.00)S (144,536.00S 356,773.00S 917,109.00 S 142,709.00 366,843.00 550,265.00 C Before Tax Income/(Loss) (A-B DI Less: 214,064.00 $ (1,640,000.00)$ (656,800.00 $ (656,800.00) $ (144,536.00 E After Tax Income/(Loss Notes Management /Administration cost inflation of 2% er year CEO Year 2 Year 3 Year 4 Year Year 150,000.00$153,000.00 $ 100,000.00 159,181.00 162,365.00 106,121.00 108,243.00 $ 102,000.001 arketin $ 125,000.00 $ 127,500.00$ 130,050.00$132,651.00$135,304.00 $ 100,000.00 $ 102,000.00$ 104,040.00$106,121.00$108,243.00 106,121.00 108,243.00 424,483.00$ 432,973.00 1,034,678.00 $1,055,371.00 413,871.00 422,149.00 VP sa ef Tec chnolgy officer $ 102,000.001 VP Operations Other Amin personnel sala Total sala Benefits-40% of total sala $ 100,000.00 $ 400,000.00$ 408,000.00 $ 975,000.00 $ 390,000.00 $ 416,160.00 S 405,756.00 $ 2,434,536.00 1,014,390.00 $ $ 397,800.00 2,483,227.00 2,532,891.00 $ 2,340,000.00 $ 2,386,800.00 Total Management/ Administration cost

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