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HW-Chap2_Solutions

# HW-Chap2_Solutions - TC(I =(0.9(3.0 1.0 = 3.7/3.0 = \$1.23...

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Engineering Economy GE 272 Chapter 2 2-2 (a) 75 hours (b) 125 hours (c) 250 hours Average cost = 0 Ave.cost = (25)(\$75)/125 = \$15 Ave.cost = (150)(\$75)/250 = \$45 Marginal cost = 0 Marginal cost = \$75 Marginal cost = \$75 2-5 x = no. of maps dispensed per year (a) Fixed Cost (I) = \$1,000 (b) Fixed Cost (II) = \$5,000 (c) Variable Costs (I) = 0.800 (d) Variable Costs (II) = 0.160 (e) Set Total Cost (I) = Total Cost (II) \$1,000 + 0.90 x = \$5,000 + 0.10 x Thus x = 5,000 maps dispensed per year. The student can visually verify this from the figure. (f) System I is recommended if the annual need for maps is <5,000 (g) System II is recommended if the annual need for maps is >5,000 (h) Average Cost @ 3,000 maps:
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Unformatted text preview: TC (I) = (0.9) (3.0) + 1.0 = 3.7/3.0 = \$1.23 per map TC (II) = (0.1) (3.0) + 5.0 = 5.3/3.0 = \$1.77 per map Marginal Cost is the variable cost for each alternative, thus: Marginal Cost (I) = \$0.90 per map Marginal Cost (II) = \$0.10 per map 2-8 x = annual production (a) Total Revenue = (\$200,000/1,000) x = \$200 x (b) Total Cost = \$100,000 + (\$100,000/1,000)x = \$100,000 + \$100 x (c) Set Total Cost = Total Revenue \$200 x = \$100,000 + \$100 x x = 1,000 units per year The student can visually verify this from the figure. (d) Total Revenue = \$200 (1,500) = \$300,000 Total Cost = \$100,000 + \$100 (150) = \$250,000 Profit = \$300,000 − \$250,000 = \$50,000 2-15...
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