Suppose you have just have been awarded a new contract where you will be making an additional 150,000 brackets in the next 4 months. The material cost of the brackets is $0.98 per bracket and there is a 5% scrap rate.

1. What is the total material cost?
2. Suppose you find a waste hauler that will buy your scrap for $0.15 in³. The brackets volume is 3.75 in³.
   1. What is your salvage value?
3. 2. What is your new total cost?

Please don't use excel, I would like to see the problems done by hand.