Cost Summary--Page 2

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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):

Straight time:

$288 or Dn, Rp or Ps 890 per hour for Model 1

Second shift:

110% of straight time

Overtime:

150% of straight time (200% in N/P/S)

 

 

Maintenance:

$25 or Dn, Rp or Ps 150 per hour per line

 

Standard costs/unit

Labor

$2.88

Lc  8.90  

Materials

 1.23

5.72  

Maintenance

 0.25

1.50  

Total (Qual 2/Feat 2)

$4.36

Lc 16.12  

(Qual 3 or Feat 3)  + 10%

 

 

(Qual 1 or Feat 1)  - 10%

 

 

 

Capacity adjustment cost

Layoff standby cost:

$52,000 or Dn, Rp or Ps 312,000 per quarter per line

Deactivation cost:

$100,000 or Dn, Rp or Ps 600,000 per line

Reactivation cost:

$50,000 or Dn, Rp or Ps 300,000 per line

 

Construction Costs:

New 1st shift line:

$500,000 or Lc 3,000,000 per line + Worker training:  $100,000 or Lc 600,000 per line

New 2nd shift line:

$100,000 per line worker training (home area only)

New addition to plant:

$900,000 or Dn, Rp or Ps 5,400,000 per 2-line addition

New plant construction:

2 lines capacity:  $1,200,000 or Dn, Rp or Ps 7,200,000

 

4 lines capacity:  $1,900,000 or Dn, Rp or Ps 11,400,000

 

6 lines capacity:  $2,600,000 or Dn, Rp or Ps 15,600,000

 

8 lines capacity:  $3,300,000 or Dn, Rp or Ps 19,800,000

 

10 lines capacity:  $4,000,000 or Dn, Rp, or Ps 24,000,000

 

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.