ntent/2611866/View AGEC 3423 Machinery Costs Charlie is considering the purchase of a new combine and header to harvest a total of 3,600 acres of grain each year. The list price is $480,000; however, the local dealer will give him a 10 percent discount. He anticipates owning the combine 10 years. The combine has a 30- foot grain platform and operates at 4 miles per hour with a field efficiency of 82.5 percent. The combine is diesel powered with a 275 hp engine. He anticipajes paying S2.75 per gallon for diesel fuel. The interest rate is 7 $17.00 per hour. percent and he values his labor at A.Complete the following. (Be sure to specify units). I. List Price = LP 2. Purchase Price PP 3. Estimated Years Owned YL 4. Acres per Hour APH APH speed MPH) x width fe ) x efficiency 8.25 5. Machine Hours per Year HPY acres to be harvested APH 6. Hours of Useful Life UL 7. Salvage Value SV t1112 Vew as Te DOLL nter ent/2611866/View Fixed Cost of Ownership 8. Depreciation Cost per Year DCPY YL 9. Interest Cost per Year INTCPY x r Tax Cost per Year-TCPY pp x 0.01 11. Insurance Cost per Year INSCPY 10. TCpY PP+SV INSCPYx.006 tent/2611866/View th 12. Total Fixed Cost per Year = TFCPY 13, Total Fixed Cost per Machine Hour-TFCPH Variable Cost of Ownership 14. Repair cost over life RCL 15. Fuel Cost per Machine Hour FCPH FCPH -(fuel price) x (0.044x HP) 16. Lubrication Cost Per Machine Hour LUBCPH LUBCPH-FCPHx 0.15 17. Labor Cost per Machine Hour LABCPH LABCPH = 1.1 x (wage rate) 18. Repair Cost per Machine Hour RCPH 19. Total Variable Cost per Machine Hour TVCPH Per Acre Cost 20. Total Fixed Cost per Acre-TFCPA 21, Total Variable Cost per Acre TVCPA 22. Total Cost per Acre TCPA Hi wl 11866/Vievw costHW 20. Total Fixed Cost per Acre TFCPA 21. Total Variable Cost per Acre- TVCPA 22. Total Cost per Acre TCPA B. They could lease the same machine for 15% of list price annually. They would have to pay for fuel, lubricants, and labor but the firm would handle repairs, taxes, and insurance Assume that they pay the lease after harvest. Thus, they pay no interest cost. If they leased the machine what would their total: 1. What is fixed cost per acre? 2. What is variable cost per acre? 3. What is total cost per acre? C. They could continue to hire a custom operator. The custom operator has been charging $27.00 per acrc. If the yields per acre and income tax consequences are the same for all three options, how should they harvest their grain? Why? DOLL ntent/2611866/View AGEC 3423 Machinery Costs Charlie is considering the purchase of a new combine and header to harvest a total of 3,600 acres of grain each year. The list price is $480,000; however, the local dealer will give him a 10 percent discount. He anticipates owning the combine 10 years. The combine has a 30- foot grain platform and operates at 4 miles per hour with a field efficiency of 82.5 percent. The combine is diesel powered with a 275 hp engine. He anticipajes paying S2.75 per gallon for diesel fuel. The interest rate is 7 $17.00 per hour. percent and he values his labor at A.Complete the following. (Be sure to specify units). I. List Price = LP 2. Purchase Price PP 3. Estimated Years Owned YL 4. Acres per Hour APH APH speed MPH) x width fe ) x efficiency 8.25 5. Machine Hours per Year HPY acres to be harvested APH 6. Hours of Useful Life UL 7. Salvage Value SV t1112 Vew as Te DOLL nter ent/2611866/View Fixed Cost of Ownership 8. Depreciation Cost per Year DCPY YL 9. Interest Cost per Year INTCPY x r Tax Cost per Year-TCPY pp x 0.01 11. Insurance Cost per Year INSCPY 10. TCpY PP+SV INSCPYx.006 tent/2611866/View th 12. Total Fixed Cost per Year = TFCPY 13, Total Fixed Cost per Machine Hour-TFCPH Variable Cost of Ownership 14. Repair cost over life RCL 15. Fuel Cost per Machine Hour FCPH FCPH -(fuel price) x (0.044x HP) 16. Lubrication Cost Per Machine Hour LUBCPH LUBCPH-FCPHx 0.15 17. Labor Cost per Machine Hour LABCPH LABCPH = 1.1 x (wage rate) 18. Repair Cost per Machine Hour RCPH 19. Total Variable Cost per Machine Hour TVCPH Per Acre Cost 20. Total Fixed Cost per Acre-TFCPA 21, Total Variable Cost per Acre TVCPA 22. Total Cost per Acre TCPA Hi wl 11866/Vievw costHW 20. Total Fixed Cost per Acre TFCPA 21. Total Variable Cost per Acre- TVCPA 22. Total Cost per Acre TCPA B. They could lease the same machine for 15% of list price annually. They would have to pay for fuel, lubricants, and labor but the firm would handle repairs, taxes, and insurance Assume that they pay the lease after harvest. Thus, they pay no interest cost. If they leased the machine what would their total: 1. What is fixed cost per acre? 2. What is variable cost per acre? 3. What is total cost per acre? C. They could continue to hire a custom operator. The custom operator has been charging $27.00 per acrc. If the yields per acre and income tax consequences are the same for all three options, how should they harvest their grain? Why? DOLL