EGE-3012 Summer 2018 lune 5h, 2018 Dr.Munther Hermez (E) In engineering economic

Question

EGE-3012 Summer 2018 lune 5h, 2018 Dr.Munther Hermez (E) In engineering economic cost is a decision making tangible factor. True / False (F) Sunk costs must be ignored in engineering economic decision making as sunk costs are money already spent and do not have any consequence on decision making. True / False Q.3 The following cost data for the product has been compiled (collected) Item Cost $167 Selling price Materials and purchased parts $25/unit Direct Labor If the overhead expenses are charged at 80 % of labor cost, determine the manufacturing cost per unit ? 2 hrs at $20 per hour

Explanation / Answer

E Economic factors are tangible factors

True

Engineering economy is the application of economic factors to judge which alternative is more effective.

F True

Sunk cost is always irrelevant; these are not costs that can be changed, or, recovered

The decision only impacts the future course of business.

Q3.

Materials and purchased part = $25 per unit

Direct Labour - $40

Overhead = 0.8*40 = 32

Manufacturing cost per unit = $97

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