Subject: Engineering Economics

A manufacturer has a contract to produce 5,000 units of a certain device. The device can be made by highly trained workmen working individually. The device can also be made by less-skilled workmen working together if they are given specialized equipment and proper supervision. The highly-trained workmen are paid P20.00 per hour, and each can produce one unit every 2 hours, on the average. The specialized equipment can be placed in operation at an original cost of P60,000 and it will be worthless at the time all the 5,000 units are manufactured. With this equipment four men, paid P15.00 each per hour, and a foreman, paid P25.00 per hour, can do the work. All the five men working together can finish one unit in 15 minutes. Determine the gain or loss if the specialized equipment is used