6 A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds afterit is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing abrake that would reduce the coasting time to 3 seconds.The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coastint time. The operator earns $11an hour and direct costs for operation are $4 an hour. The direct costs are incurred whenever the operator has to work. The brake will requireservicing every 477 hours of operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $43 in parts andmaterial. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value.How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded annually?Enter your answer in this format: 1234.56

Net present value refers to the amount present today for an asset based on the value that will be…

Answered: A machine that produces a certain piece…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 13E

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A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds. The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coastint time. The operator earns $13 an hour and direct costs for operation are $2 an hour. The direct costs are incurred whenever the operator has to work. The brake will require servicing every 587 hours of operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $60 in parts and material. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value. How much could be spent for the brake if the Minimum Attractive Rate of Return is 10%…
A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds. The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coasting time. The operator earns $12 an hour and direct costs for operation are $2 an hour. The direct costs are incurred whenever the operator has to work. The brake will require servicing every 594 hours of machine operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $42 in parts and materials. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value. How much could be spent for the brake if the Minimum Attractive Rate of…
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