14. A short-term project requires 10,000 hours of unskilled labour and5,000 hours of skilled labour. Both are currently fully utilised.The unskilled workers are paid £10 per hour and would work up to15,000 more hours of overtime at an overtime rate of £15 per hour.Alternatively, additional labour could be recruited at £18 per hour.The skilled workers are paid £30 per hour. They will not workovertime, and no suitable new workers can be recruited. Sufficienthours could be obtained by transferring them from other work whichhas a contribution of £10 per hour (after accounting for labour costs).What is the relevant cost of labour for the proposed project?(a) £425,000(b) £350,000(c) £275,000(d) £200,000

concept. For decision making , only relevant cost are useful. Irrelevant cost and sunk cost are not…

Answered: 14. A short-term project requires…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 1PB: Variety Artisans has a bottleneck in their production that occurs within the engraving department....

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A new project being considered by BLW Co would require 1,000 hours of skilled labour. The current workforce is already fully employed but more workers can be hired in at a cost of $20 per hour. The current workers are paid $15 per hour on a project that earns a contribution of $10 per hour. What is the relevant cost of labour to be included in the project appraisal? A $10,000 B $15,000 C $20,000 D $25,000
Alex considers using two robots instead of one worker per shift on an assembly line. The robots together cost $135000. They have an expected life of 15 years, although their expected scrap value is zero. This life depends on economic loss and does not depend on wear. The maintenance and operating costs of the robots are expected to be $5000 per year per shift worked. Each person in Nur's company costs $25,000 per shift per year. If the firm's interest rate is 17%, what is the equivalent annual value for the robots? Calculate separately for one shift and three shifts.
Don't use pen or paper Suppose a project will require 2500 local labour hours at the construction stage. Assume it can hire 80 % of labour who would otherwise be unemployed and 20% of labour will be sourced from elsewhere in the economy. The market wage of labour is $45 per hour while the leisure time for unemployed labour is measured at $20 per hour. Match the following values you would use in the CBA: Total labour cost (market price) Total labour cost (shadow price) Total net employment Total opportunity cost of labour A. 112500 B. 50000 C. 40000 D. 62500 E. 62500
21. The cost of producing a small transistor radio set consists of P23.00 for labor and P 370.00 for material. the fixed charges in operating the plant is P 100,000.00 per month. The variable cost is P 10.00 per set. The radio set can be sold for P 750.00 each. Determine how many sets must be produced per month to break-even.
A machine that is not equipped with a brake “costs” 30 seconds after the power is turned off upon completion of each piece, thus preventing removal of the work from the machine. The time per piece, exclusive if this stopping time is 2 minutes. The machine is used to produce 40,000 pieces per year. The operator receive P35.00 per hour and the machine overhead rate is P20.00 per hour.How much could the company afford to pay for a brake that would reduce the stopping time to 3 seconds, if it would have a life of 5 years? Assume zero salvage value, capital worth 18% and that repairs and maintenance would total not over P300.000 per month.
The cost of producing a small transistor radio set consists of P22.00 for labor and P36.00 for materials. The fixed charges in operating the plant are P100,000 per month. The variable cost is P1.50 per set. The radio set can be sold for P78.00 each. Determine How many sets must be produced per month to break-even? How many sets must be produced per month to each at least P 100,000 If the price drops by 10% after selling 5,000 units, how many sets must be produced per month to break-even
CNR Computer is considering moving some of its operations overseas in order to reduce labour costs. In the United Kingdom, its main circuit board costs CNR Computer £75 per unit to produce, while overseas it costs only £65 to produce. Holding costs are based on a 20 percent annual interest rate, and the demand has been a fairly steady 200 units per week. Assume that setup costs are £200 both locally and overseas. Production lead times are one month locally and six months overseas. Approximate the average annual costs of production, holding, and setup at each location, assuming that an optimal solution is employed in each case. Based on this information, which location is preferable?
The cost of producing a small transistor radio set consists of P22.00 for labor and P36.00 for materials. The fixed charges in operating the plant are P100,000 per month. The variable cost is P1.50 per set. The radio set can be sold for P78.00 each. Determine If the price drops by 10% after selling 5,000 units, how many sets must be produced per month to break-even
Suppose that a constraint for assembly time has a shadow price of \$50/hour for 15 hours in either direction and that all available assembly time is currently used (would require overtime to do more the salary of workers is $30 and they receive 50% extra pay for overtime what should management do? Pay $30 per hour and net $20 profit per hour for all 15 hours Pay 545 per hour and net $5 profit per hour for all 15 hours Pay $15 per hour overtime net $35 profit per hour for all 15 hours Do not pay the S45 hour premium rate to achieve only $15 more proht per hour Pay $50 per hour shadow price for all 15 hours
The cost of producing a small transistor radio set consists of P22.00 for labor and P36.00 for materials. The fixed charges in operating the plant are P100,000 per month. The variable cost is P1.50 per set. The radio set can be sold for P78.00 each. Determine How many sets must be produced per month to each at least P 100,000?
Three machines are employed in an isolated area. They each produce 2000 units of output per month, the first requiring $20,000 in raw materials, the 2nd $25,000, and the 3rd $28,000. What would you expect to be the monthly charge for the first and second machines if the services of the third machine can be hired at a price of $9000 per month? Which parts of the charges for the first two machines are economic rent?
Propiem 11-20 (Aigo) Makе оr вuу Decisions (LUTI-SJ "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $19 per drum, we would be paying $5.35 less than it costs us to manufacture the drums in our own plant. Since we use 60,000 drums a year, that would be an annual cost savings of $321,000." Antilles Refining's current cost to manufacture one drum is given below (based on 60,000 drums per year): Direct materials Direct labor Variable overhead Fixed overhead ($3.00 general company overhead, $1.70 depreciation, and $0.70 supervision) Total cost per drum $10.45 7.00 1.50 5.40 $ 24.35

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