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SUMMARY OF THE BUSINESS POLICY GAME COSTS — Year 3, Quarter 1
(Costs change over time because of inflation and changes made by management.)
Production Costs
Labor costs/line: Model 1, Quality 2, Features 2 (other models as reported):
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Straight time:
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$288 or Dn, Rp or Ps 890 per hour for Model 1
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Second shift:
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110% of straight time
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Overtime:
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150% of straight time (200% in N/P/S)
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Maintenance:
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$25 or Dn, Rp or Ps 150 per hour per line
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Standard costs/unit
Labor
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$2.88
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Lc 8.90
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Materials
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1.23
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5.72
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Maintenance
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0.25
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1.50
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Total (Qual 2/Feat 2)
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$4.36
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Lc 16.12
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(Qual 3 or Feat 3) + 10%
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(Qual 1 or Feat 1) - 10%
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Capacity adjustment cost
Layoff standby cost:
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$52,000 or Dn, Rp or Ps 312,000 per quarter per line
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Deactivation cost:
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$100,000 or Dn, Rp or Ps 600,000 per line
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Reactivation cost:
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$50,000 or Dn, Rp or Ps 300,000 per line
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Construction Costs:
New 1st shift line:
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$500,000 or Lc 3,000,000 per line + Worker training: $100,000 or Lc 600,000 per line
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New 2nd shift line:
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$100,000 per line worker training (home area only)
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New addition to plant:
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$900,000 or Dn, Rp or Ps 5,400,000 per 2-line addition
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New plant construction:
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2 lines capacity: $1,200,000 or Dn, Rp or Ps 7,200,000
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4 lines capacity: $1,900,000 or Dn, Rp or Ps 11,400,000
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6 lines capacity: $2,600,000 or Dn, Rp or Ps 15,600,000
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8 lines capacity: $3,300,000 or Dn, Rp or Ps 19,800,000
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10 lines capacity: $4,000,000 or Dn, Rp, or Ps 24,000,000
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Other Expenses
Executives' salaries: $50,000 or Lc 300,000 per manufacturing plant, $25,000 or Lc 150,000 per sales office, each quarter
Plant depreciation: $26,000 per quarter (existing plant)
Straight-line basis over 31.5 years, no salvage value (0.7937% per quarter)
Equipment depreciation: $107,000 in Year 2, Quarter 4 (existing equipment)
Straight-line basis over 7 years, no salvage value (3.5714% per quarter)
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We hope you find The Business Policy Game to be a challenging, exciting way to learn. Good luck and happy simulating.
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