1.The equipment for applying specialty coatings that provide a high angle of skid for
the paperboard and corrugated box industries has a delivered cost of $390,000. If
the overall cost factor for the complete system is 3.96, the total plant cost is
approximately
Sol: $1,544,400.00
2.A labor crew for placing concrete consists of one labor foreman at $25 per hour,
one cement finisher at $30 per hour, four laborers at $20 per hour each, and one
equipment operator at $35 per hour. Such a crew can place 200 cubic yards of
concrete per 8-hour day. Determine the cost to place 600 cubic yards of concrete.
Sol: $4,080
3.The cost for a 200-horsepower pump with a VFD controller is $42,000. The cost
estimate of a similar pump of 300 horsepower capacity, provided the exponent in
the cost-capacity equation is 0.64, is closest to
Sol: $54,444
4.The cost for constructing a small building in 1999 was $700,000. The construction
cost index was 6059 at that time. The estimated cost of a similar building when the
index value is 10,000 is closest to
Sol: $1,155,300.00
5.Referring to the diagram below, what is the project’s estimated net present
worth?
Sol: Wages of workers producing the engine parts
6.The IT department allocates indirect costs to user departments on the basis of CPU
time at the rate of $2,000 per second. For the first quarter, the two heaviest use
departments logged 900 and 1,300 seconds, respectively. If the IT indirect budget
for the year is $19.56 million, the percentage of this year’s allocation consumed by
these departments is closest to
Sol: 22.50%
7.According to the example depicted on the chart below, an estimate of the total
cost of the project made when the project design is 60-100% complete should be
no more than _% away from the actual project cost.
Sol: 10
8.Ojeda Inc. expects to incur $800,000 of indirect cost during the next year of
operations. Its next year projections call for total direct material cost of $400,000,
total direct labor cost of $1,200,000, and 100,000 direct labor hours. Ojeda allocates
its indirect cost based on the number of direct labor hours. Given the information
above, Ojeda’s next year’s pre-determined indirect cost rate is $________ per direct
Sol: $8
9.Western Refining currently allocates insurance costs on the basis of cost per direct
labor hour. The total insurance cost for the year is budgeted at $600,000. The
annual labor hours for the company’s three departments are expected to be 50,000
for department A, 125,000 for department B, and 75,000 for department C. How
much of the insurance cost should be allocated to department B?
Sol: $300,000
10.Consider a company manufacturing engine parts. The management reviews a
proposal for production of a newly designed engine part. The information includes
various cost estimates provided by the accounting department, regarding the cost
of labor, material, overhead, and other cost components of the new part, based on
past costs incurred in production of its existing product line. The management used
the cost information to estimate the expected cost per unit for the new engine part,
added a 20% mark-up, and thus determined the selling price of the newly designed
engine part. What approach was used by the management in determining the
selling price?
Sol: Bottom-up approach
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