Question

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 per month.

Answer 1

Answer:

A machine that is not equipped with a brake "coasts" 30 seconds after the power is turned off upon completion of each work piece, thus preventing removal of the work from the machine. The time per piece, exclusive of this stopping time, is two minutes. The machine is used to produce 40,000 pieces per year. The operator receives $16.50 per hour, and the machine overhead rate is $4.00 per hour. How much could the company afford to pay for a brake that would reduce the stopping time to three seconds if it had a life of five years? Assume zero market value, a MARR of 15 % per year, and repairs and maintenance on the brake totalling no more than $250 per year