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.

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.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 16PB: At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The...

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At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: What is the annual financial impact of hiring the extra worker for the bottleneck process?
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The monthly demand for ice cans being manufactured by Mr. Sison is 3,200 pieces with a manually operated guillotine, the cost cutting price is 25 pesos per piece. An electrically operated hydraulic guillotine is offered to Mr. Sison with the price of 275,000 pesos and which will cut by 30% less the unit cutting cost of money. How many months will Mr. Sison be able to recover the cost of the machine if he decides to buy now. Ans. 11.5 months
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