Hansen Company Case

Hansen Company Case - HANSENCOMPANY

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HANSEN COMPANY The Hansen Company specialized in the manufacture of pipe couplings for use in  industrial and residential construction.  In the Hansen plant, two-inch and six-inch diameter  sewer and housing connection couplings were machined on two converted metal lathes.  These  lathes had been purchased in used condition six years previously, and the remaining net book  value of each is $5,000  (35% of the initial cost).  The lathes were being depreciated on the  straight-line method.  Larger sewer couplings, of 8-inch to 14-inch diameters, were machined in  a small boring mill, which was fully depreciated.  All three  pieces of equipment (the two  converted lathes and the boring mill) were badly worn, and considerable difficulty had been  encountered in machining couplings to meet production specifications.  In the opinion of the  industrial engineering supervisor, it was necessary either to overhaul or replace the machines  (i.e., continued operation without an overhaul is not an option).  All three machines were  considered to have zero salvage value.  
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This note was uploaded on 01/06/2012 for the course BUS M 201-1 taught by Professor Jennlarson during the Fall '11 term at BYU.

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Hansen Company Case - HANSENCOMPANY

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