Question
please answer all parts (a) A firm purchases a machine for $10,000 to manufacture a certain product. The expected life for the machine is 2
please answer all parts
(a) A firm purchases a machine for $10,000 to manufacture a certain product. The expected life for the machine is 2 years with no salvage value. A discount rate of 10% p.a. is used. In addition to the cost of the machine, the machine also incurs a fixed overhead cost of $4238 p.a. regardless of production quantity.
(1) The annual cost of the machine is?
(2) The machine annual fixed cost which includes both machine cost & fixed overhead cost is?
(3) If the firm produces 2500 items p.a. and each item costs $10 in materials and labour, the total cost of each item to the firm is?
(b) A certain product costs $10 in material cost and $80 in labour cost. The manufacturing lead time (MLT) for this product is 13 weeks. The holding cost rate is 20% per year. The MLT cost i.e. WIP cost) for this product is
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