Question
Pokmon Holdings is considering the purchase of a new piece of canning equipment. They have chosen their preferred supplier based on a total sales price
Pokmon Holdings is considering the purchase of a new piece of canning equipment. They have chosen their preferred supplier based on a total sales price of $300,000. This supplier has limited engineering resources so they will only help with installation, and not provide any ongoing maintenance or repair support, leaving that all to Pokmon Holdings to perform. The analysis conducted by the Asset Procurement Team has indicated the following expected costs: empoyees Costs (uptime only) 5000 per day Maintenance Costs (preventative only) $3000 per week Rep Costs (service only) $9,000 per month Spare Parts Inventory $7,000 per year Capital Costs 5% of purchase price per month
Pokmon Holdings expects to run this equipment throughout the entire year, and to have it operating for 240 days of the year outside of maintenance. They also expect to keep this piece of equipment for 3 years, and to sell it for scrap at the end of the 7th year for a total value of $20,000. What is the total annual cost for this canning equipment? What is the total of the costs over its expected life? What is the actual Total Cost of Ownership for this piece of canning equipment if purchased?
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