Business, 30.09.2019 22:00 tanyalaurenti

In the dorben company a materials handling operation in the warehouse is being done by hand labor. annual disbursements for this labor and for closely related expenses (social security, accident insurance, and other fringe benefits), are $8,200. the methods analyst is considering a proposal to build certain equipment to reduce this labor cost. the first cost of this equipment will be $15,000. it is estimated that the equipment will reduce annual disbursements for labor and labor extras to $3,300. annual payments for power, maintenance, and property taxes and insurance are estimated to be $400, $1,100, and $300, respectively. the need for this particular operation is anticipated to continue for 10 years. because the equipment is specially designed for the particular purpose, it will have no salvage value. it is assumed that the annual disbursements for labor, power, and maintenance will be uniform throughout the 10 years. the minimum rate of return before income taxes is 10 percent. based on annual cost comparison, should the company proceed with the new material handling equipment?

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In the dorben company a materials handling operation in the warehouse is being done by hand labor. a...

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