2 - Present Economy - GL
2 - Present Economy - GL
2 - Present Economy - GL
1. When revenues and other economic benefits are present and vary
among alternatives, choose the alternative that maximizes overall
profitability based on the number of defect-free units of a product or
service produced.
2. When revenues and other economic benefits are not present or are
constant among all alternatives, consider only the costs and select the
alternative that minimizes the total cost per defect-free unit of
product or service output.
Selection of Material
Selection of Method
A diesel engine uses Type A filter and high-grade lubricating oil costing
Php5.50 per liter. With this filter, the oil and the filter have to be changed
every 500 hours of operation, and 5 liters of oil have to be added every
100 hours. This filter costs Php148 a piece. Eighty liters of oil fill the
engine. Another type, filter B, costing Php120 may be used with a lower
grade of oil costing Php4.80 per liter. However, if this filter is used, the oil
and filter have to be changed every 300 hours and 10 liters are added
after each 150 hours the engine is used. Which type of filter and oil
would you recommend?
Problem Details:
Selection of Method
Source A Source B
Average distance (gravel pit to dam site) 3.0 km 1.2 km
Source A Source B
Economy of Tool and Equipment
Maintenance
A machine used for cutting materials in a factory has the following outputs per hour at various speeds and
requires periodic tool regrinding at the interval cited.
A set of tools costs Php1,800 and can be ground twenty times. Each regrinding costs Php18.00 and the time
needed to regrind and change tools is 1 hour. The machine operator is paid Php28.00 per hour, including the time
the tool is changed. The tool grinder who also sets the tools to the machine is paid Php25.00 per hour. The
hourly rate chargeable against the machine is Php54.00, regardless of machine speed. Which speed is the most
economical?
Economy in the Utilization of Personnel
1. A machine part to be machined may be made 2. The ore of a gold mine in the Mountain Province
either from an alloy of aluminum or steel. There contains, on the average, 0.5 gram of gold per
is an order for 8 000 units Steel cost P 3.80 per ton One method of processing costs 1 650 per
kg, while aluminum cost 8.70 per kg If steel is ton and recovers 93% of the gold, while another
used, the steel per unit weighs 110 grams; for method cost only 1 500 per ton and recovers 81%
aluminum, 30 grams When steel is used, 50 units of the gold If gold can be sold at 8 500 per
ca be produced per hour for aluminum, 80 units gram, which method is better and by how much?
per hour with the aid of a tool costing 640
which will be useless after 8 000 units are
finished The cost of the machine and the
operator is 10.80 per hour If all other cost are
identical, determine which material will be more
Economical.