Problem 1
In an average month, Acme Copy Shop produces 175,000 copies per month. Acme is evaluating two machines to replace its existing copier. Machine A would cost $5,000 per month and have a variable cost of $0.040 per copy. Machine B would cost $4,000 per month and have a variable cost of $0.045 per copy.
(a) If all other considerations are equal, which machine should Acme choose? Why?
(b) Acme is hoping to obtain a major new customer. If successful, 50,000 copies would be added to monthly volume. If no other factors change, would your answer to (a) be different? Why?
Problem 2
Apex Oil Exploration Company currently pays Zenith Trucking Company $9,500 per month to transport oil from one of Apex's oil fields to a local refinery. To reduce costs, Apex is considering whether to acquire its own tanker truck to replace the service provided by Zenith. The truck would cost $105,000 and is estimated to have a useful life of 5 years. Operating expenses for the truck are estimated to be $7,000 per month. The company's evaluation discount rate for a proposal of this type is 12%. Should Apex proceed with this proposal? Why?
Problem 3
Acme Industries, Inc. produces fans for computer server farms. The company makes 600 fans per day using the following resources:
|
Item
|
Units
|
Number of
units
|
Cost per unit
|
|
Units produced per day
|
Fans
|
|
600
|
|
|
|
Resources used per day:
|
|
|
|
|
|
|
Labor hours
|
Hours
|
|
60
|
5
|
30.00
|
|
Raw material
|
Pounds
|
|
3,000
|
|
9.00
|
|
Energy
|
Dollars
|
5
|
1,000
|
|
|
|
Capital
|
Dollars
|
5
|
3,000
|
|
|
Based on this data, answer the following questions. Label your numeric answer appropriately. For example, the answer to (a) would be x units per labor hour - the "units per labor hour" must be a part of the answer.
(a) What is the labor productivity per labor hour for this product?
(b) What is the energy productivity for this product?
(c) What is the multifactor productivity for this product?