In evaluating projects, LeadTechs engineers usea rate of
Chapter , Problem 13-35(choose chapter or problem)
In evaluating projects, LeadTechs engineers usea rate of 15%. One year ago a robotic transfermachine was installed at a cost of $38,000. At thetime, a 10-year life was estimated, but the machinehas had a downtime rate of 28% which is unac-ceptably high. A $12,000 upgrade should fix theproblem, or a labor-intensive process costing $3500in direct labor per year can be substituted. The plantestimates indirect plant expenses at 60% of directlabor, and it allocates front office overhead at 40%of plant expenses (direct and indirect). The robothas a value in other uses of $15,000. What is thedifference between the EACs for upgrading andswitching to the labor-intensive process?
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