Mega Holding is a contractor company specialise in bridge construction. The company has been offered two projects to construct a bridge at two different locations. However, based on its capability, the company can only accept one project at a time. A cost estimation has been made in order to decide which project should be undertaken and the cost factors relating to the two projects are shown in Table Q2. Table Q2 COST FACTORS PROJECT A PROJECT B Concrete beams and columns needed 6 beams, 12 columns 8 beams, 16 columns Equipment rental (per month) Site investigation Labour cost: (i) Design engineer |(ii) Field/construction engineer RM 1,000 RM 2,500 RM 40,636 RM 30,848 RM 150 per hour RM 100 per hour RM 130 per hour RM 90 per hour The design phase for both projects take 3 months and the construction phase take 9 months which in total of 12 months are needed to complete each project (with 6 working days per week and 8 working hours per day). The volume for each beam and column are 500 m³ and 314 m³ respectively. The cost of concrete is RM 65 per unit volume. The revenue for the bridge construction comes from the toll payment by the users of the bridge. The fees for each automobile that passes through the bridge is RM 1.10 per automobile on average. The average number of automobile passes through the bridge is 60,000 per year (a) Calculate the total cost for both projects (b) Choose the best project and state your reason. From your answer in (b), determine how many years the company start making a profit. (c)
Mega Holding is a contractor company specialise in bridge construction. The company has been offered two projects to construct a bridge at two different locations. However, based on its capability, the company can only accept one project at a time. A cost estimation has been made in order to decide which project should be undertaken and the cost factors relating to the two projects are shown in Table Q2. Table Q2 COST FACTORS PROJECT A PROJECT B Concrete beams and columns needed 6 beams, 12 columns 8 beams, 16 columns Equipment rental (per month) Site investigation Labour cost: (i) Design engineer |(ii) Field/construction engineer RM 1,000 RM 2,500 RM 40,636 RM 30,848 RM 150 per hour RM 100 per hour RM 130 per hour RM 90 per hour The design phase for both projects take 3 months and the construction phase take 9 months which in total of 12 months are needed to complete each project (with 6 working days per week and 8 working hours per day). The volume for each beam and column are 500 m³ and 314 m³ respectively. The cost of concrete is RM 65 per unit volume. The revenue for the bridge construction comes from the toll payment by the users of the bridge. The fees for each automobile that passes through the bridge is RM 1.10 per automobile on average. The average number of automobile passes through the bridge is 60,000 per year (a) Calculate the total cost for both projects (b) Choose the best project and state your reason. From your answer in (b), determine how many years the company start making a profit. (c)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 9E
Related questions
Question
Transcribed Image Text:Mega Holding is a contractor company specialise in bridge construction. The company has
been offered two projects to construct a bridge at two different locations. However, based on
its capability, the company can only accept one project at a time. A cost estimation has been
made in order to decide which project should be undertaken and the cost factors relating to
the two projects are shown in Table Q2.
Table Q2
COST FACTORS
PROJECT A
PROJECT B
Concrete beams and columns needed
Equipment rental (per month)
Site investigation
Labour cost:
(1) Design engineer
(ii) Field/construction engineer
6 beams, 12 columns
8 beams, 16 columns
RM 1,000
RM 2,500
RM 40,636
RM 30,848
RM 150 per hour
RM 100 per hour
RM 130 per hour
RM 90 per hour
The design phase for both projects take 3 months and the construction phase take 9 months
which in total of 12 months are needed to complete each project (with 6 working days per
week and 8 working hours per day). The volume for each beam and column are 500 m' and
314 m respectively. The cost of concrete is RM 65 per unit volume. The revenue for the
bridge construction comes from the toll payment by the users of the bridge. The fees for
each automobile that passes through the bridge is RM 1.10 per automobile on average. The
average number of automobile passes through the bridge is 60,000 per year
(a)
Calculate the total cost for both projects
(b)
Choose the best project and state your reason.
(c)
From your answer in (b), determine how many years the company start making a
profit.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
