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En Cima Appendix_4[1]

En Cima Appendix_4[1]

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05/09/2014

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Appendix 4
Cost-Benefit Analysis
In-House Manufacturing vs. Subcontracting
Initial Cash Outlay
In-House
No. of units
Unit cost
Total Cost
Subcontracting
Total Cost
Business permits
P 5,000
Major renovations
395,000
Equipment:
Juki sewing machines
10
P 33,000
330,000
Ironing equipment
2
13,000
26,000
chairs & tables
50,000
Edging machines
5
42,000
210,000
Buttonhole machines
5
38,000
190,000
Total Equipment cost
806,000
TOTAL
P 1,206,000
TOTAL
None
Year 1
In-House
No. of
units
Unit cost
Total Cost
Subcontracting
Total Cost
Direct Materials
P 3,473,378*
Direct Materials
P 3,473,378*
Direct Labor (sewers)
12
P 8,000
96,000
Direct Labor
3,639,696*
plus 10% benefits
800
9,600
Indirect Materials
173,669
Total Variable Costs
P 3,752,647
Factory Overhead:
Indirect Labor
10
P 7000
P 840,000
Plant Administrative costs
4
12,500
600,00
0
Factory Supplies
25,000
300,00
0
Plant Rental Fees
55,000
660,00
0
Depreciation of Equipment
80,60
0
Utilities
25,00
0
300,00
0
Repair & Maintenance
40,30
0
483,60
0
Transportation
35,00
0
420,00
0
Insurance
20,00
0
240,00
0
Total Fixed Costs
P 3,924,200
TOTAL
P 7,676,847
TOTAL
P 7,113,074
Year 2
In-House
No. of units
Unit
cost
Total Cost
Subcontracting
Total Cost
Direct Materials
P 3,566,964*
Direct Materials
P 3,566,964*
Direct Labor (sewers)
12
P 8,000
96,000
Direct Labor
3,737,762*
plus 10% fringe benefits
12
800
9,600
Indirect Materials
178,348
Total Variable Costs
P 3,850,912
Total Fixed Costs
P 3,924,200
TOTAL
P 7,775,112
TOTAL
P 7,304,726

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