PM592_W2_Assignment_Key - PM592 Week 2 Assignment Problems...

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PM592 – Week 2 Assignment Problems Answer Key Instructors: Both questions and answers have been provided to assist you with the grading process. The correct answers can be found in blue text. 2-1 Basic Estimating Problem Your company is installing a new piece of machining equipment and a robotic arm. Your manager asks for the project costs by cost category as well as the total amount. Given the following information, develop a base cost estimate by grouping costs by Equipment / Material (items 1 – 4), Installation / Labor (items 5 and 6), and Overhead (items 7-9). 1. Two pieces of equipment costing $ 15,000 and $ 35,000 2. Material required for electrical hook-up is 400 feet at $ 25 per foot 3. Controls for each piece of equipment are estimated at $ 600 each 4. Required start-up material is 3,700 pounds at $ 2.70 per pound 5. Company labor for installation requires two maintenance specialists for two days at eight hours per day and $ 35 per hour 6. Contract labor is estimated at a fixed price of $ 7,500 7. Engineering is estimated to be 15% of (equipment / material) cost based on past experience 8. Inspection is estimated to be 3% of (labor) cost based on past experience 9. General and Administrative expenses are estimated to be 5% of the total of (equipment / material) and (labor) based on past experience. Note: For this problem, only items 5 and 6 are considered "labor" for the purpose of calculating items 8 and 9. Check answer: Total project cost = $94,737.60 Equipment and Material Two pieces of equipment $50,000.00 (15,000 + 35,000) Material for electrical hook up 10,000.00 (400 x 25) Controls for each equipment 1,200.00 (600 x 2) Required start-up Mat. 9,990.00 (3,700 x 2.7) $71,190.00 Installation and Labor 2 Maintenance specialists $1,120.00 (35 x 16 x 2) Contract Labor 7,500.00 (Given) $ 8,620.00 Misc. Engineering
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This note was uploaded on 03/26/2012 for the course PM586ON PM586 taught by Professor Wade during the Fall '10 term at Keller Graduate School of Management.

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PM592_W2_Assignment_Key - PM592 Week 2 Assignment Problems...

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