1 of 9 STOplS pts o el 1-15A (similar to) Faced with rising pressure for a $17 p

Question

1 of 9 STOplS pts o el 1-15A (similar to) Faced with rising pressure for a $17 per hour minimum wage rate, the farming industry is currently exploring the possible use of robotics to replace some farm workers. The Farmhand is one such robot; its job is to thin out a field of lettuce, removing the least promising buds of lettuce. By removing these weaker plants, the stronger lettuce plants have more room to grow. Assume the following facts: (Click the icon to view the information.) Cost-Benefit Analysis

Explanation / Answer

Cost benefit analysis for first year of implementation is shown as follows:-

Cost-Benefit Analysis (Amounts in $)

Thus there is a net benefit of $13,576 if farmhand is used.

Expected Benefits (Cost Savings): Saving in Labor Cost (25 workers*50 hrs*$17 per hour) 21,250 Saving in Payroll Taxes ($21,250*7.65%) 1,626 Total expected benefits (A) 22,876 Expected Costs: Purchase Cost of Farmhand 7,500 Cost for Delivery 600 Annual Operating Cost of Farmhand 1,200 Total expected costs (B) 9,300 Net expected benefits (cost) (A - B) 13,576

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