Problems 61 2-7 Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as follows: requires additional food, personal care, and support staff time. The estimated cost for each person is $4000 per person per month. (a) How many senior citizen residents does the facil- ity need to have in order to reach the breakeven point? (b) What is the company's annual profit or loss if they maintain an average residency level of 350 Equipment cost: $288,000lyear Equipment salvage value at EOY5 = S41.00 Variable cost per unit of production: $14.55 Overhead cost per year: $48,300 if the Miller Company uses a 5-year planning hori- senior citizens? zon and the product can be sold for a unit price of $39.75, how many units must be produced and sold each year to break even? Contributed by Paul R McCright, University of South Florida Contributed by Gillian Nicholls, University of Alabama Huntsville The Ozzie Chocolate Company is preparing to offer 2-12 A Chocolate Bite bar. Material costs per new candy bar are $0.20 for chocolate, $0.01 for sugar, and $0.02 for mint flavoring. Labor costs of the new product are approximately $0.12 per bar. Adding a produc- tion line devoted to the new candy will cost $250,000 a new product in its candy offerings, the Minty Dark 2-s An assembly line can produce 90 units per hour. The A line's hourly cost is $4500 on straight time (the first 8 hours). Workers are guaranteed a minimum of 6 hours. There is a 50% premium for overtime, bow- ever, productivity for overtime drops by 5%. what are the average and marginal costs per unit for the following daily quantities? per year (a) If the sales price is $1.23 per candy bar, how many must the company make per year in order to break even? Assume that each bar made is sold (a) 450 (b) 600 (c) 720 (d) 900 (b) What is the company's profit or loss if they make and sell 300,000 candy bars at the S1.23 price in the first year? 2-9 Christine Lynn travels from her home to a remote island. Her trip involves: car travel of 200 miles, air travel of 300 miles, and a boat ride of 50 miles. She is interested in calculating the average fuel cost per mile (per person) of her trip. Assume the fuel effi ciency of car, air, and boat travel is 20, 0.20, and 2 miles per gallon, respectively, and that fuel cost per gallon is equal for all and is $3.00gallon. She was alone in the car and among 180 people on the plane and 10 on the boat. What is the average fuel cost per mile, per person? Contributed by Gillian Nicholls, University of Alabama Huntsville 2-13 A small machine shop, with 30 hp of connected load, purchases electricity at the following monthly rates (assume any demand charge is included in this schedule) per hp of connected load: First 50 kWh at 12.6f per kWh Next 50 kWh at 10.6g per kWh Next 150 kWh at 9.0d per kWh Over 250 kWh at 7.7g per kWh The shop uses 2800 k Wh per month. your vendor invoiced $50,000 in test- 2-10 This month ing charges for your production run. The unit cost A for testing is twice as much for each of the first 500 units per month If we shipped 750 units to the vendor this month, find: as compared to each unit over 500. (a) Calculate the monthly bill for this shop. What are the marginal and average costs per kilowatt-hour? (b) A contract for additional business would require more operating hours per day. This will use an extra 1200 kWh per month. What is the "cost" of this additional energy? What is this per kilowatt hour? (a) Average cost per unit; (b) Cost per unit below the price break point: cost for the 600 2-11 The Country Fields Retirement Community charges S6,000/month for a single senior citizen to reside in an efficiency apartment with assisted living care. The facility has operating expenses of $600,000 per month. Staffing levels are dependent on the number of residents. Each senior who enters the community (c) New machines would reduce the labor time required on certain operations. These will increase the connected load by 10 hp, but since they will operate only on certain special jobs