Tutorial CEV633 – CHP 3

1. In the general equation for determining the cost of manufacturing (COMd), Equation (8.2), one of
the terms is 0.180FCI, where FCI is the fixed capital investment of the plant. “This term is
included to cover the interest payment on the loan for the plant.” Is this statement true or false?
Explain your answer.

2. When estimating the cost of manufacturing (COMd) for a chemical process, the overall COMd
may be estimated using only five individual costs. List these five costs?

3. In Equation (8.2), the cost of operating labor, COL, is multiplied by a factor of 2.73. One reason
for this is that the value of COL includes only plant operators and not supervisory and clerical
labor costs. Is this statement true or false? What other factors (if any) account for the
multiplication factor of 2.73?

4. You are employed at a chemical company and have recently been transferred from a plant that
manufactures synthetic dyes to a new facility that makes specialty additives for the polymer resin
industry.
a. You have been asked to estimate the cost of manufacturing at this new facility. Would you
i. Use Equation (8.2) to estimate COMd?
ii. Use data from the old plant where you worked, because you are very familiar with all the
aspects of manufacturing for that process?
iii. Dig up information on the new process and use these figures?
b. When would you use a relationship such as Equation (8.2)?