FAJRUL FALAH
03993130005
1.
The purchased cost of a shell and tube heat exchanger (floating head and carbon
steel tubes) with 100 ft2 of heating surface was $ 3000 in 1980. What will be the
purchased cost of a similar heat exchanger with 200 ft2 of heating surface in 1980
if the purchased cost index is 0.6 for surface area ranging from 100 to 400 ft 2 ? If
the purchased areas ranging from 400 to 2000 ft 2, what will be the purchased cost
of a heat exchanger with 1000 ft2 of heating surface in 1985 ?
Answer:
In 1980, cost of heat exchanger =
=
200 ft 2
$ 3000
2
100 ft
0.6
$ 4547.1497
From Marshall index, Table 3 for 1980 is 560 and 1985 is 790.
In 1985, cost of heat exchanger =
=
3.
$ 3000
790 1000 ft 2
560 100 ft 2
0.81
$ 27325.0093
The purchased and installation cost of stone pieces of equipment are given as a
function of weight rather than capacity. An example of this is the installed cost of
lange tanks. The 1980 cost for an installed aluminium tank weight 100000 lb was
$ 390000. For a size range from 200000 to 1000000 lb, the installation cost
weight exponent for aluminium tanks is 0.93. If an aluminium tank weight
700000 lb is required, what is the present capital investment needed ?
Answer:
The present capital investment =
=
4.
700000 lb
$ 390000
100000 lb
0.93
$ 2382351.199
What weight of installed stainless steel tank could have been obtained for the
same capital investment as in the previous problem ? The 1980 cost for an
istalled 304 stainless steel tank requiring 300000 lb was $ 670000. The installed
cost weight exponent for stainless steel tank is 0.88 for a size range from 300000
to 700000 lb.
Answer:
The capital investment
$ 2382351.199
Stainless steel tank weight for the same capital investment is y.
The present capital investment =
5.
300000 lb
0.88
0.88
$ 670000
$ 2382351.199
$ 670000
300000 lb
$ 1268175.0022 lb
The purchased cost of a 1400 gal stainless stell tank in 1980 was $ 7500. The
tank is cylindrical with flat top and bottom, and the diameter is 6 ft. If enteri
outer surface of the tank is to be covered with 2 in thickness of magnesia block,
estimate the present total cost for the installed and insulated tank. The join 1,
1980 cost for the 2 in magnesia block was $ 2.20 per ft 2 the labor for installed the
insulattion was $ 5.00 per ft2 ?
Answer:
Thickness of magnesia block =
2 in.
0.1667 ft
1400 gal (US)
187.1536 ft3
Volume
r2 h
187.1536 ft3
3.14 (3 ft)2 h
High cylindrical, h
6.6226 ft
Outside diameter
6 ft + 2 0.1667 ft
6.3333 ft
Volume
Area cylindrical (insullation), A =
Cost of insullation
2 r2 + 2 r h
2 (3.1667 ft)2 + 2 3.1667 ft 6.6226 ft
194.6786 ft2
Area insullation cost of insullation per area
194.6786 ft2 $ 2.20 ft-2
$ 428.2929
Cost of installation
The present total cost
6.
Area insullation cost of installation per area
194.6786 ft2 $ 5.00 ft-2
$ 973.3930
Cost of insullation + Cost of installation
$ 428.2929 + $ 973.3930
$ 1401.6859
An one story warehouses 120 ft by 60 ft is to be added to existing plant.
An
asphalt payment service area 60 ft by 30 ft will be added adjacent to warehouse.
It will also be necessary to put in 500 line ft of railroad siding to service the
warehouse. Utility service lines are aready aviabel at the warehouse site.
The
propored warehouse has a concrete floor and steel frame, wales, and roof. No
heat is necessary but lighting and sprinkler must be installed. Estimate the total
cost of the proposed addition. Consist App. B for necessary cost data !
Answer:
From App. B, we get the cost of equipment and buildings:
Warehouse with single story, 15 ft clearence, steel frame, manory wales, floor-roof,
heating, lighting and plumering =
$ 28.00 per ft2
Aspalt tile
$ 1.40 per ft2
Railroad siding track (90 lb)
$ 63.00 per line ft
Sprinkler system wet
$ 1.65 per ft2
Cost of warehouse
(120 ft 60 ft)
$ 28.00 per ft2
201600
Cost of aspalt tile
(60 ft 30 ft) $ 1.40 per ft2
2520
Cost of railroads
(500 line ft) $ 63.00 per line ft
31500
Cost of sprinkler
(120 ft 60 ft)
$ 1.65 per ft2
11880
Total cost
7.
$ 247420
Purchases equipment cost for a solid processing plant is $ 500000. The plant is
to be constructed as an additional to an exsting plant. Estimate the total capital
investment and the fixed capital investment for the plant. What percentage
and amount of the fixed capital investment is due to cost for the land and
contractor fee ?
Answer:
From the Table 17 Ratio extimating capital investment for solid processing
process with purchased equipment $ 500000.
Direct Cost:
Purchased equipment delivered
100 % $ 500000
45 % $ 500000
% $ 500000
16 % $ 500000
10 % $ 500000
25 % $ 500000
13 % $ 500000
40 % $ 500000
% $ 500000
500000
Purchased equipment installation
225000
Instrumentation and control
45000
Piping
80000
Electrical
50000
Buildings
125000
Yard improvements
65000
Service facilities
200000
Land
30000
Total Direct Cost
$ 1320000
Indirect Cost:
Engineering supervisor
33 % $ 500000
39 % $ 500000
165000
Constrution expenses
195000
Total Indirect Cost
$ 360000
Total Direct and Indirect Cost
$ 1680000
Contractor Fee, 5 % (D + I)
% $ 1680000
Contigency,
10 % $ 1680000
$ 168000
$ 1932000
10 % (D + I)
Fixed Capital Investment, FCI
84000
Working Capital, 15 % TCI
Total Capital Investment, TCI =
TCI
=
Fixed Capital Investment + Working Capital
FCI + 0.15 TCI
Total Capital Investment, TCI =
Fixed Capital Investment
0.85
Percent cost of land
$ 1932000
0.85
$ 2272941.1765
$ 30000
100 %
$ 1932000
1.5528 %
Percent cost of contractor fee =
=
8.
$ 84600
100 %
$ 1932000
4.3789 %
The purchased equipment cost for a plant which produce pentaerytric (solid fuel
processing plant) is $ 300000. The plant is to be an addition to an existing
formaldehid plant. The major part of the cost will be for indoor contruction and
contractor fee will be 7 % of the direct plant cost. All other cost are close to
average values faound for trypical chemical plant. On the basis of this
information estimate the following
a.
Total Direct Production Cost
b.
Fixed Capital Investment
c.
Total Capital Investment
Answer:
a.
From the Table 17 Ratio extimating capital investment for solid liquid
processing process with purchased equipment $ 300000.
Direct Cost:
Purchased equipment delivered
100 % $ 300000
39 % $ 300000
13 % $ 300000
31 % $ 300000
10 % $ 300000
29 % $ 300000
10 % $ 300000
55 % $ 300000
% $ 300000
300000
Purchased equipment installation
117000
Instrumentation and control
39000
Piping
93000
Electrical
30000
Buildings
87000
Yard improvements
30000
Service facilities
165000
Land
18000
Total Direct Cost
b.
$ 879000
Indirect Cost:
Engineering supervisor
32 % $ 300000
34 % $ 300000
96000
Constrution expenses
102000
Total Indirect Cost
$ 198000
Total Direct and Indirect Cost
7
% $ 879000
Contigency,
10 % $ 1077000
$ 107700
$ 1246230
10 % (D + I)
61530
Working Capital, 15 % TCI
Total Capital Investment =
Fixed Capital Investment + Working Capital
TCI
FCI + 0.15 TCI
Total Capital Investment =
9.
$ 1077000
Contractor Fee, 5 % DPC
Fixed Capital Investment, FCI
c.
Fixed Capital Investment
0.85
$ 1246230
0.85
$ 1466152.9412
Estimate by turnover ratio method the fixed capital investment required for a
proposed sulfuric acid plant (battery limit) which has capacity of 140000 ton of
100 percent sulfuric acid per year (constant catalytic process) using the data from
table 19 for 1990 with sulfuric acid cost at $ 7 per ton. The plant may be
considered as operating full time. Repeat using the cost capacity exponent
method with data from table 19 !
Answer:
Turn over ratio
gross annual sales
fixed capital investment
$ 72 per ton 100000 ton
$ 3000000
2.4000
gross annual sales
turn over ratio
$ 72 per ton 140000 ton
2.4000
$ 4200000
For capacity 140000 ton
Fixed capital investment
For Table 19 cost capacity exponent, we get for capacity 100000 ton with
cost production $ 32 per ton.
Fixed capital investment
$ 32 per ton 140000 ton
$ 4480000
10. The total capital investment for chemical plant is $ 1 milion and the working
capital is $ 100000. If The plant can produce an average of 8000 kg of fural
product per day during a 365 day. What selling price in dollars per kilograms of
product would be necessary to give a turn over ratio of 1.0 ?
Answer:
Total capital investment
$ 1000000
Working capital
$ 100000
Fixed capital investment
Total capital investment Working capital
$ 1000000 $ 100000
$ 900000
8000 day
2920000 year
Turn over ratio
gross annual sales
fixed capital investment
Gross annual sales
1.00 $ 900000
$ 900000 per year
gross annual sales
capacity
$ 900000 per year
kg
2920000
year
$ 0.3082 per kg
Capacity
Selling price
kg
kg
11. A process plant was constructed in the Philadelpia area (Middle Atlantic) at
labor cost of $ 200000 in 1980. What would the average cost for the same plant
to be in the Miami, Florida area (South Atlantic), if it were constructed in late
1988 ? Assume for simplicity that the remain labor rate and relative productivity
factor remain essensially constant !
Answer:
From Table 20, We get:
In 1980,
At Philadelpia labor cost
At Miami relative labor rate ratio =
At Miami production cost
$ 200000
0.84
1.06
0.7925
0.91
0.96
0.9479
Construction labor cost of Philadelpia Area (Middle Atlantic) to Miami Florida
Area (South Atlantic)
0.7925
0.9479
0.8361
In 1980, construstion labor cost at Miami
0.8361 $ 200000
$ 167220
$ 167220
$ 215528
From Table 3, We get index ratio:
In 1988, labor cost at Miami
870
675
12. A company has been selling soap contain 30 percent by weight water at a price of
$ 10 per 10 lb f.o.b (i.e. freight on board, which means the laundry pays the
freight charge). The company offers an equally effective soap containning only
5 % water. The water content is of no importance to the laundry and it is willing
to accept the soap containning 5 % water, if the delivered cost are equivalent, if
the freight rate is 70 cents per 100 lb. How much should the company charge the
laundry per 100 lb f.o.b. for the soap containning 5 % water ?
Answer:
For 100 lb soap f.o.b consist of 30 lb water and 70 lb soap with price $ 10 dan
70 cents for freight.
For 100 lb soap f.ob. consist of 95 lb soap and 5 lb water, 70 cents for freight
and price
95 lb soap
$ 10
70 lb soap
$ 13.5714
So the company has change to laundry $ 13.5714 for soap f.o.b. containning
5 % water.
13. The total capital investment for a conventional chemical plant is $ 1500000 and
the plant produce 3 million kg of product annualy. The selling price of the
product is $ 0.82 per kg. Working capital amounts to 15 % of the total capital
investment. The investment is from compnay fund and no interest is charged.
Row material costs for the product are $ 0.09 per kg, utilities $ 0.05 per kg and
packing $ 0.068 per kg. Distibution cost are 5 % of the total product cost.
Estimate the following:
a.
Manufacturing cost per kilogram of product
b.
Total product cost per year
c.
Profit per kilogram product before taxes
d.
Profit per kilogram product after taxes
Answer:
Total capital investment
$ 1500000
Capacity
3000000 kg per year
Selling price
$ 0.82 per kg
Working capital
15 % total capital investment
15 % $ 1500000
$ 225000
Raw material
$ 0.09 per kg
Labor
$ 0.08 per kg
Utilities
$ 0.05 per kg
Packing
$ 0.008 per kg
Distribution
5 % total production cost
a.
DPC + FC + POC
$ (0.09 + 0.08 + 0.05 + 0.008) per kg
$ 0.228 per kg
Manufacturing cost + General expence
$ 0.228 per kg 3000000 kg per year + 0.05
b.
Manufacturing cost
Total production cost
TPC
Total production cost
c.
$ 684000 per year
0.95
$ 720000 per year
Profit per kilogram before taxes
Total annual sales
Profit
Profit per kilogram
d.
$ 0.82 per kg 3000000 kg per year
$ 2460000 per year
Total annual sales Total production cost
$ 2460000 per year $ 720000 per year
$ 1740000 per year
Profit per year
capacity
$ 1740000 per year
3000000 kg per year
$ 0.58 per kg
Profit per kilogram after taxes
Assumsion Taxes
Profit
Profit per kilogram
2 % Fixed capital investment
=
2 % ($ 1500000 $ 225000)
$ 25500
Profit before taxes Taxes
$ 1740000 $ 25500
$ 1714500
Profit per year
capacity
$ 1714500 per year
3000000 kg per year
$ 0.5715 per kg
15. A company has direct production cost equal to 50 % of total annual sales and
fixes change, overhead and general expences equal to $ 200000. If management
proposes to increase in fixed change, overhead and general expences. What
annual sales dolar required to provider the same gross earning as the present
plant operation ? What would be the next profit if the expanded plant zone
operated at full capacity with the income tax on gross earning fixed 24 % ? What
would the net profit for the enlarged if total annual sales remained the same as a
present ? What would to be the net profit for enlarged plant if the total annual
sales actually decreased to $ 700000 ?
Answer:
Total annual sales
$ 800000
Direct production cost
50 % $ 800000
$ 400000
FC + POC + GE
$ 200000
Gross earning
TAS (DPC + FC + POC + GE)
$ 800000 ($ 400000 + $ 200000)
$ 200000
Assumsion the increases of FC + POC + GE is 10 %.
FC + POC + GE
a.
b.
c.
Total annual sales
Net Profit
110 % $ 200000
$ 220000
Gross earning + (DPC + FC + POC + GE)
$ 200000 + (50 % $ 800000 + $ 220000)
$ 820000
Gross earning Taxes
$ 200000 34 % $ 200000
$ 132000
Gross earning when total annual sales is the same ($ 800000)
Gross earning
d.
TAS (DPC + FC + POC + GE)
$ 800000 (50 % $ 800000 + $ 220000)
$ 180000
Gross earning if total annual sales $ 700000
Gross earning
TAS (DPC + FC + POC + GE)
$ 700000 (50 % $ 700000+ $ 220000)
$ 130000
e.
Net Profit
Gross earning Taxes
$ 130000 34 % $ 130000
$ 85800
16. A process plant making 2000 tons per year of product selling for $ 0.80 per lb has
annual direct production cost of $ 2 million at 100 % capcity and other
fixed
cost of $ 700000. What is the fixed cost per lb at the break even point ? If the
selling price of the product is increased by 10 % ? What is the dollar increase in
net profit at full capcity if the income taxes is 34 % of gross earning ?
Answer:
a.
Capacity
2000 ton per year
4409240 lb per year
Selling price
$ 0.80 per lb
Direct production cost
$ 2000000
Fixed change
$ 700000
Total production cost
Direct production cost + Fixed change
$ 2000000 + $ 700000
$ 2700000
Break even point, when total annual product cost same as total annual
cost.
$ 0.8 per lb n
$ 0.5 per lb n + $ 700000
$ 700000
$ 0.3 per lb
2333333.3333 lb
$ 700000
2333333.3333 lb
$ 0.30 per lb
Fixed cost
b.
Selling price increase 10 % =
Gross annual sales
110 % $ 0.8 per lb
$ 0.88 per lb
$ 0.88 per lb 4409240 lb per year 1 year
$ 3880131.2000
Gross earning
Net Profit
Gross annual sales Total production cost
$ 3880131.2000 $ 2700000
$ 1180131.2000
Gross earning Taxes
$ 1180131.2000 34 % $ 1180131.2000
$ 778886.5920
