Christ the King College Calbayog City Production and Operation Management Assignment 1.

What are the two basic types of costs? 2. Define and give some example of recurring cost 3. Define and give example of capital expenditures. 4. How does devaluation expense differs from a depreciation expense? 5. What is compound interest? 6. Define irreducible or intangible factors. How do they enter into the decision making process? The owner of a reproduction service has not been able to obtain certain kinds of orders because she does not have the equipment which would enable her to do the work involved. A supplier of this equipment has two types available. The following data serve to describe the cash-flow pattern that would be generated by each type Required investment Service Life Salvage Value Annual Revenues Annual Operating costs Cost of money 74,000 10years 6,000 43,000 17,000 30% 56,000 5years 5,000 39,000 15,000 30%

The owner of the business is confronted by two questions.Should she invests in the equipment? And if so which of the two types is the more attractive investment? You are asked to answer these questions by making the following: a.) Uniform annual cost analysis b.) A present worth analysis in which you do not make use of the calculated total uniform annual cost.