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Question

hStream TV and Movies LiHw 3 C file///C/Use Emgt 3320 HW f18.pdf x e chegg Study l Guided Sc mgt96203320%20HW%203%20f1 8.pdf The cost of construction for a polypropylene plant with a capacity of 60 Kilotons per annum tpa) was $15 million ten years ago, when the current construction cost index was 4535. If the ijdex increased at an average rate of 6.8% per year for the past ten years, what would a 50 Ktpa ant with a similar design be expected to cost now? Use the cost-capacity exponent of 0.56 3. The costs of manufacturing the new widgets for a company are as follows: Cost Elements Direct labor Material Overhead costs Cost Rate $16.75 per hour $310 per 60 units | 130% of direct labor The production has a 95% learning curve applied to labor required, and the time to complete the first unit was 52 direct labor hours. Determine the unit selling price based on the estimated time to complete the 100th unit, if the company wants a profit margin of 19% based on total manufacturing costs 4. A new boss wants to estimate the costs of an offsite team-building event for her 14 employees 9:21 PM O Type here to search a49/19/2018

Explanation / Answer

Cost of plant at time A (Ca)= $15 million

Construction Cost index (Ia) = 4535

Construction Cost Index at time B (Ib) = 4535 * (1.068^10) = 8755.6787 = 8755.68

Let Cost of plant at Time B = Cb

We know: Ca/Cb = Ia/Ib

Cb=(Ca*Ib) / Ia = (15*8755.68)/4535 = $ 28.96 million

So Cost of plant at Time B = $28.96 million

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