HW-Chap2_Solutions

HW-Chap2_Solutions - TC (I) = (0.9) (3.0) + 1.0 = 3.7/3.0 =...

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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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