Cost Graph in Engineering Economics
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10. For a given operation the fixed costs are 4,000,000. The semi-variable costs are 20% of the fixed costs plus $5.20 per unit. The variable costs are $16.00 per unit. The business unit is looking for a 15% markup. If the units sell for $28.00 per unit, what is the break-even point and the shut down point for production. Draw the cost graph for this operation and calculate the points requested.
11. Estimate the manufacturing cost to produce 1.5 million gallons per year of paint. The plant operates 16 hours per day about 300 days per year and costs $15,000,000 to build. In producing the product, about ½ gallon of ingredient "A" costing $3 per gallon and 2 gallons of ingredient "B" costing $2 per gallon is produced. In addition about ½ gallon of by-product worth $.30 per gallon is produced. The plant has average maintenance problems and requires average supervision. Utility costs are approximately $1.80 per gallon of product produced. There are no interest charges or royalties. The waste disposal charges are $.50 per gallon of product produced.
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Solution Summary
Draw the cost graph for this operation and calculate the points requested.
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