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    Assignment in Ee

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    Rosendo Dizon Nual
    This document contains the name of a student, Jomar Arana, and an assignment in engineering economy. It presents a scenario where Jerry and Linda need to replace one of their cars to minimize annual gas consumption. Jerry's old car gets 10 mpg while Linda's gets 25 mpg. Jerry could trade in for a 15 mpg car, while Linda could trade for a 50 mpg hybrid. Based on upgrading from 25 mpg to 50 mpg being a 100% improvement over 10 mpg to 15 mpg being 50%, the summary concludes that Linda's car should be replaced to minimize gas usage.

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    Assignment in Ee

    Uploaded by

    Rosendo Dizon Nual
    266 views3 pages
    This document contains the name of a student, Jomar Arana, and an assignment in engineering economy. It presents a scenario where Jerry and Linda need to replace one of their cars to minimize annual gas consumption. Jerry's old car gets 10 mpg while Linda's gets 25 mpg. Jerry could trade in for a 15 mpg car, while Linda could trade for a 50 mpg hybrid. Based on upgrading from 25 mpg to 50 mpg being a 100% improvement over 10 mpg to 15 mpg being 50%, the summary concludes that Linda's car should be replaced to minimize gas usage.

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    This document contains the name of a student, Jomar Arana, and an assignment in engineering economy. It presents a scenario where Jerry and Linda need to replace one of their cars to minimize annual gas consumption. Jerry's old car gets 10 mpg while Linda's gets 25 mpg. Jerry could trade in for a 15 mpg car, while Linda could trade for a 50 mpg hybrid. Based on upgrading from 25 mpg to 50 mpg being a 100% improvement over 10 mpg to 15 mpg being 50%, the summary concludes that Linda's car should be replaced to minimize gas usage.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    266 views3 pages

    Assignment in Ee

    Uploaded by

    Rosendo Dizon Nual
    This document contains the name of a student, Jomar Arana, and an assignment in engineering economy. It presents a scenario where Jerry and Linda need to replace one of their cars to minimize annual gas consumption. Jerry's old car gets 10 mpg while Linda's gets 25 mpg. Jerry could trade in for a 15 mpg car, while Linda could trade for a 50 mpg hybrid. Based on upgrading from 25 mpg to 50 mpg being a 100% improvement over 10 mpg to 15 mpg being 50%, the summary concludes that Linda's car should be replaced to minimize gas usage.

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    © All Rights Reserved
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    Name: ARANA, JOMAR A.

    ASSIGNMENT IN ENGINEERING ECONOMY

    Course & Section: BSIE-B2019

    Exercise: 1

    Answer the problem:

    Consider this situation: Linda and Jerry are faced with a car replacement opportunity where an interest
    rate can be ignored. Jerry’s old clunker that averages 10 miles per gallon (mpg) of gasoline can be traded
    in toward a vehicle that gets 15 mpg. Or, as an alternative, Linda’s 25 mpg car can be traded in toward a
    new hybrid vehicle that averages 50 mpg. If they drive both cars 12,000 miles per year and their goal is
    to minimize annual gas consumption, which car should be replaced Jerry’s or Linda’s? They can only
    afford to upgrade one car at this time.

    Jerry’s old clunker = 10 miles per gallon of gasoline can be traded to 15 mpg vehicle.

    Linda’s car = 25 mpg can be traded to 50 mpg hybrid vehicle.

    From 25 mpg to 50 mpg [50-25/25(100)] = 100% upgrade

    From 10 mpg to 15 mpg [15-10/10(100)] = 50% upgrade

    As for my calculation the one that Jerry and Linda must to be upgraded is Linda’s Car. Because it can run
    a hundred percent upgrade for the usual usage of gasoline. If Linda uses her old that runs 12,000 miles
    per year and the average of gasoline usage for it is 480 gallons per year, while in the hybrid car is 240
    gallons per year. Almost they can save half of the usual usage of gasoline for the new car.
    Exercises: 2

    Classify each of the following cost items as mostly fixed or variable: (2.1)

    VARIABLE1.1 Raw materials

    FIXED 1.2 Administrative salaries

    FIXED 1.3 Direct Labor

    FIXED 1.4 Payroll taxes

    FIXED 1.5 Depreciation

    FIXED 1.6 Insurance (building and Supplies equipment)

    FIXED 1.7 Utilities

    FIXED 1.8 Clerical salaries

    VARIABLE1.9 Property taxes

    VARIABLE1.10 Sales commissions

    VARIABLE1.11 Interest on borrowed money

    FIXED 1.12 Rent

    2. Which of the following statements are true and which are false? (all sections)

    TRUE A.) Working capital is a variable cost.

    TRUE B.) The greatest potential for cost savings occurs in the operation phase of the life cycle.

    TRUE C.) If the capacity of an operation is significantly changed (e.g., a manufacturing plant),
    the fixed costs will also change.

    FALSE D.) A noncash cost is a cash flow.

    TRUE E.) Goods and services have utility because they have the power to satisfy human wants
    and needs.

    TRUE F.) The demand for necessities is more inelastic than the demand for luxuries.
    TRUE G.) Indirect costs can normally be allocated to a specific output or work activity.

    FALSE H.) Present economy studies are often done when the time value of money is not a
    significant factor in the situation.

    TRUE I.) Overhead costs normally include all costs that are not direct costs.

    FALSE J.) Optimal volume (demand) occurs when total costs equal total revenues.

    TRUE K.) Standard costs per unit of output are established in advance of actual production or
    service delivery.

    TRUE L.) A related sunk cost will normally affect the prospective cash flows associated with a
    situation.

    TRUE M.) The life cycle needs to be defined within the context of the specific situation.

    TRUE N.) The greatest commitment of costs occurs in the acquisition phase of the life cycle.

    TRUE O.) High breakeven points in capital intensive industries are desirable.

    FALSE P.) The fixed return on borrowed capital (i.e., interest) is riskier than profits paid to equity
    investors (i.e., stockholders) in a firm.

    TRUE Q.) There is no D∗ for this Scenario 1 situation: p = 40 − 0.2D and CT = $100 + $50D.

    TURE R.) Most decisions are based on differences that are perceived to exist among
    alternatives.

    TRUE S.) A non-refundable cash outlay (e.g., money spent on a passport) is an example of an
    opportunity cost.

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