EMT320W8KeyTerms

© All Rights Reserved

192 views

EMT320W8KeyTerms

© All Rights Reserved

- MSC Nastran 2012 Design Sensitivity and Optimization User’s Guide
- Project Report on Field testing and performance evaluation of axial flow combine harvester in paddy crop
- Business management proposal Plan Template
- Financial Feasibility Report on Aquva Spa - Analysis of Fi.
- Solution File Mgt-402 S-03
- Dessert Bakery
- CVP Analysis Questions
- Exam 2 Managerial Accounting Ch 4-6
- IJAIEM-2013-05-15-026
- Introduction to Mfg Tooling
- Acoustic Treatment on Diesel Generator Set Marketing Plan 2010
- Worksheet in DEP CAL.latest
- yang1991.pdf
- Mosi_London_thesis.pdf
- Sensitivity Analysis
- Ch10
- 101917993-Auto-Repair-and-Car-Wash-Business-Plan.docx
- MG6863-2marks
- 1977-Engineering Analysis of Water-distribution Systems
- 2002 Lenhart Eckhardt Fohrer Frede Comparison Two Approaches Sensitivity Analysis PCE

You are on page 1of 5

Hello Class. Welcome to the final chapter of this course. I hope that you enjoyed the

course and have learned some new things that can apply to your future work and to

your personal finances. In any good economic study we start with the definitions so that

we are all on the same page.

We start with breakeven analysis. Breakeven analysis can be performed for one project

analysis or for two alternatives. For a single project, it determines a parameter value

that makes revenue equal to cost .For two alternatives the breakeven is when they are

equally acceptable bases on a calculated of one parameter common to both

alternatives. Make or buy decisions for contractor services, manufactured components,

or international contracts are routinely based upon a breakeven analysis.

(PW, AW, ROR or B/C. It answers the question What If?.

Payback period is a good technique to initially determine. The technique is initially used

to determine if a procject is financially acceptable. It determines if the amount of time

necessary on a project to do two things, develop enough cash flow to recover the initial

investment and to meet or eceed the MARR.

Figure 8.1, page 208 of your text, shows some comparisons When we do breakeven

analysis we will often have to develop a graphical representation of the data.

Fixed Costs (FC) includes costs such a buildings, insurance, fixed overhead, and

information systems. These costs do not vary with the production rates and are usually

linear. Fixed costs are those that you would have if no product was produced.

Variable Costs (VC) are cost that increase or decrease with amount of production. They

include direct labor, subcontractor materials, advertising, and marketing to name a few.

These costs are usually directly related to the manufacturing of a product. The more

product, the more hours that are required to produce them. Variable costs can be

shown mathematically by the equation vQ, where v stands for the variabke cost per unit

and Q is the number of units produced.

FC + VC = TC (total cost)

When R an TC are linear functions and R = TC.This is the breakeven point, Figure 8.2

R = TC we can substitute for R rQ and we can substitute for TC, VC + FC

Q BE = FCrv Breakeven equals FC divided by revenue cost per unit minus variable cost

per unit

Figure 8.2 shows the relation < when we have linear function of Total cost to Revenue.

breakevens.

Figure 8.3 shows how nonlinear functions of TC and R related. Notice we now two

breakeven points, but only one point where we maximize profit.

Problem 8.1

To solve this problem we first calculate the breakeven point at 7500 gallons.

FC 900

Thus Q = rv = .3 .18 = 7500 gallons

However when we do the second part of the equation the first answer plays no part as

we now have two different breaks in the price per gallon

So revenues now require you to add the revenue at 5000 gallon at .30 per gallon to

some unknown quantity Q at .2 a gallon and costs the fixed cost of $900 plus .18 times

the first 5000 gallons plus Q at .18 per gallon

gallons This means that we need to add 15,000 gallons, this is the amount above the

5000 gallons where we reach break even. On the graph this is $4500

Another equation that you can use for breakeven analysis is a revenue cost equation

TC FC+vQ FC

Therefore C = Q = Q = Q +v

There is a good example of the use of PW, FW and AW for use in breakeven analysis

on page 213 of your book. Please read it.

Breakeven used to determine the value of aq parameter that is common to two

alternatives. Breakeven analysis usually involved revenue or cost variables common to

both alternatives. It is common to find the breakeven value by equating PW or AW

equivalence relations. The AW is preferred when the variable units are expressed on a

yearly basis or when alternatives have unequal lives.

2. Use the AW or PW analysis to express the total cost of each alternative as a

function of the common variable

3. Equate the two relations and solve for breakeven value

4. The select guideline is based on the selected level of the common variable and

the size of the variable cost.

Expected variable level < breakeven value: Select variable with the higher

variable cost. (larger slope on the TC line

Expected level > breakeven value: Select alternative with lower variable cost

(smaller slope on the TC line.

Problem 8.2

Salvage $4000 0

1. Find variable annual cost: let x = represent number of tons per year

$2 4 1 hour x tons

a. Annual VC = hour 8 tons year = 3x

b. AW AW= -23000(A/P,10%,10) + 4000(A/F,10%,10) +-3500 -3x =

-6992 -3x

a. Annual VC = $12 hour

x 3oper x1hour x xtons

x 6tons x year = 6x

b. AW = -8000(A/P,10%,5) -1500-6x

-$3610 6x

Equate the two costs 6992 -3x = 6992 -3x x = 1127 tons

If the output is over 1127 ton select the auto. If less purchase the manual

Usually one factor at a time is varied and independence with other factors is assumed.

This assumption is not completely correct in real world situations, but it is a practical

way to evaluate variations, Sensitivity analysis how a measure of worth ie, PW,AW,

ROR or B/C and the and the alternative may be altered if a particular parameter varies

over a stated range of values. For example some variation in MARR will not likely alter

the decision.

2. Variation of more than one factor for a single project,

3. Sensitivity of selection from multiple mutually exclusive alternatives to variation of

more than one parameter.

1. Determine which parameter of interest might vary from the most likely estimated

value

2. Select the most probable range (numerical or percentage) and an increment of

variation for each parameter.

3. Select the measure of worth

4. Compute the results for each parameter using the measure of worth.

5. To better interpret the sensitivity graphically display the parameter versus the

measure of worth.

Problem 8.4 Is really self explanatory if you have trouble with this go to Ask the

Professor and let me know. Even the graphing and the explanation are easy

When sensitivity of several parameters is considered for one project using a single

measure of worth, it is helpful graph percentage change for for each parameter

using a single measure of worth. Problem 8.5 shows this technique.

The solution for these is really just more of the same. The easiest way is to set up

the table 8.1 There is really nothing new. Again if you have a problem just Ask the

Professor

I hope that you have enjoyed this course. I am sure that you will find what you

learned helpful in your career and in your personal life, I know that it did for me. I

know that at times there was some difficulty in understanding the problems, but I

think that you will find that it is worth it. As I said in the beginning this was a problem

solving course. You had many problems for the assignments, midterm, and final. I

am sure that if you are reading this you were successful in those attempts.

- MSC Nastran 2012 Design Sensitivity and Optimization User’s GuideUploaded byMSC Nastran Beginner
- Project Report on Field testing and performance evaluation of axial flow combine harvester in paddy cropUploaded byMadhuri Gupta
- Business management proposal Plan TemplateUploaded byMi Bui
- Financial Feasibility Report on Aquva Spa - Analysis of Fi.Uploaded byM Faisal Panawala
- Solution File Mgt-402 S-03Uploaded bymc090203045
- Dessert BakeryUploaded bysammysid
- CVP Analysis QuestionsUploaded byqadrih8638
- Exam 2 Managerial Accounting Ch 4-6Uploaded bykotisanampudi
- IJAIEM-2013-05-15-026Uploaded byAnonymous vQrJlEN
- Introduction to Mfg ToolingUploaded byramjirao
- Acoustic Treatment on Diesel Generator Set Marketing Plan 2010Uploaded byanuar_istiq
- Worksheet in DEP CAL.latestUploaded byRaghu Nayak
- yang1991.pdfUploaded byVictor Fernandez
- Mosi_London_thesis.pdfUploaded byLibyaFlower
- Sensitivity AnalysisUploaded byMayura Damle
- Ch10Uploaded byAmbosLinderoAllanChristopher
- 101917993-Auto-Repair-and-Car-Wash-Business-Plan.docxUploaded byJamonica Roland
- MG6863-2marksUploaded byBharani
- 1977-Engineering Analysis of Water-distribution SystemsUploaded byDhiyaa Hmdan
- 2002 Lenhart Eckhardt Fohrer Frede Comparison Two Approaches Sensitivity Analysis PCEUploaded bysurotirto
- Absorption and Marginal CostingUploaded byRashmi Kr
- Takehome_quiz_manac.docx;filename_= UTF-8''Takehome%20quiz%20manac-1Uploaded bySharmaine Sur
- 2213Uploaded bydarksideministry
- ICES J. Mar. Sci.-2015-Stelzenmüller-1022-42.pdfUploaded byIan Sotheran
- final b planUploaded byapi-275072159
- 14M2B-7_-_Professionalism_Programs_-_Business_Plan_for_a_Startup_Law_Firm_Basic_Training.pdfUploaded byPallavi Singh
- CS Update May 2013 FinalUploaded byMuhammad Hasnain Sikander
- ec488Uploaded byA2A
- MEFA Unit 2 (CIVIL) 2-2Uploaded byNageswara Rao Thota
- Final Report C&MAUploaded byfaiza

- SO210W7CaseStudyUploaded byGrantham University
- LPFIntrotoComputerApplicationsSyllabusUploaded byGrantham University
- ACC210SyllabusUploaded byGrantham University
- ACC310SyllabusUploaded byGrantham University
- IS301SyllabusUploaded byGrantham University
- SO210SyllabusUploaded byGrantham University
- ACC330SyllabusUploaded byGrantham University
- ACC340SyllabusUploaded byGrantham University
- SO210W3CaseStudy.pdfUploaded byGrantham University
- SO210W7CaseStudyUploaded byGrantham University
- GU299SyllabusUploaded byGrantham University
- CS285SyllabusUploaded byGrantham University
- LD550SyllabusUploaded byGrantham University
- IS301W6LectureTablesUploaded byGrantham University
- IS301W4LectureUploaded byGrantham University
- IS301PageContentElementsUploaded byGrantham University
- IS301DiscussionPreviewUploaded byGrantham University
- IS499FinalProjectUploaded byGrantham University
- SO210W2CaseStudy.pdfUploaded byGrantham University
- SO210W4CaseStudy.pdfUploaded byGrantham University
- SO210W6CaseStudy.pdfUploaded byGrantham University
- SO210W1CaseStudy.pdfUploaded byGrantham University
- SO210W5CaseStudy.pdfUploaded byGrantham University
- CS499DiscussionPreviewUploaded byGrantham University
- LPFPrinciplesofAccountingIISyllabusUploaded byGrantham University
- CS499SyllabusUploaded byGrantham University
- EMT320DiscussionPreviewUploaded byGrantham University
- EMT320W7KeyTermsUploaded byGrantham University

- license.txtUploaded byAdrianodeRosa
- Air LeakageUploaded byanurudh
- 2014 P3 Civil.pdfUploaded byUshakanth Youganadan
- Metalica Internacional 2 LqUploaded byJillian Howard
- Victoria CMA Rental Market Report - CMHCUploaded byCTV Vancouver Island
- 473 Handbook 2004Uploaded byg665013
- CNC Technical DescriptionUploaded bypinky_y2k
- Keith Wicks Revised Grocery Study 03-17-14Uploaded bycottswdrb
- List of Volunteer Management SoftwareUploaded bympriceatccusa
- FFFF.docxUploaded bySam Gitonga
- Refraction and AccommodationUploaded byapi-19916399
- 1505.03540Uploaded byBille Jean
- SyllabusUploaded byshekhar28071
- Class x Resource MaterialUploaded byPriya Sharma
- Windsor Chariot SCS20 Parts IllustradedUploaded byNestor Marquez-Diaz
- The Devil--Guy de Maupassant (1850-1893)Uploaded byAkshay Lalwani
- Anchor handling vesselUploaded byKenneth Tan
- Meta-Analysis of Test Accuracy Studies in Stata - V1.1 April 2016Uploaded byEdward Chavez
- Lovelock Srvcmktg Ce Ppt 06Uploaded byPreetam Jain
- retractor instrument bu joice.pdfUploaded bysejati
- day 1 byzantine empireUploaded byapi-348717485
- packfenseUploaded byIldrich Elizandro Reyes Núñez
- Labor Sasfety and Health Taiwan)Uploaded bytcf2921
- 2018-02.pdfUploaded byG
- Enchanted Tales Corebook.pdfUploaded byRodrigo
- Design with regard to explosions - ULRIKA.pdfUploaded byhezigrisaro
- Northwest Airline SpeechUploaded bySamuel Lares
- Langerhans Cell HistiocytosisUploaded byDarwin Elguira
- DOCUMENTS and Letter to Denise Al-Mustafa, Claims Examiner, GEICO Insurannce Re License Plate and Contents of 2004 Santa Fe October 3, 2016Uploaded byStan J. Caterbone
- Manual Initial Configuration MikroTikUploaded byrifki abdillah