2 Question Bank - Engineering Economics by Jaime R.

'l'iong Present Economy 3

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Let x = capital Dalisay Corporation's gross margin is 45o/o of sales. Operating expenses such as
y - gross income sales and administration are 15oh of sales. Dalisay Corporation is in 40% tax
bracket. What percent of sales is their profit after taxes?
Projected earnings = 0.07x
A. 21%
Taxableincome=y-x B. 20 o/o

c. 19%
tax = 0.42 (y - x) D. 18 o/o

Net earnings = Taxable income - tax ,(*rt,"..

Net earnings = (y - x)- o.+z(v - *)
Let x = sales of Dalisay Corporation
Net earnings = 0.58(y - x)
Gross margin = 0.45x
Projected income = net earnings Operating expenses = 0.15x
0.07x=0.58(y-x)
0.07x:0.58y-0.58x Net income before taxes = 0.45x - 0.15x
0.65x = 0.58y = 0.30x

\r-_ 0.65x Since tax is 40%, net profit after taxes will be:
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o.s8
Y =1.1207x Net profit = 0.60(0.30x)
Net profit = 0.18x
.'. Rate of return before payment of taxes = 0.1207 or 12.07o/o of the capital
.'. Net profit is 18% of the sales

A manufacturing flrm maintains one product assembly line to produce signal

generators. Weekly demand for the generators is 35 units. The line operates for 7 ln determining the cost involved in fabricating sub-assembly B within a company,
hours per day, 5 days per week. What is the maximum production time per unit in the following data have been gathered:
hours required of the line to meet the demand?
.... P 0.30 per unit
A. t hour .... P 0.50 per unit
.... P 300.00 per set up
B. t hour and 10 minutes
C. t hour and 15 minutes
D. t hour and 20 minutes It is decided to subcontract the manufacturing of assembly B to an outside
company. For an order of 100 units, what is the cost per unit that is acceptable to
the company?
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Let t = maximum production time per unit A. P 3.80
B. P 4.00
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c. P 4.10
. _ (, z nours )(s oays)( l week
- day jt *""k ,1.35 ,",tr.l
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t = t hour per unit

.'. The maximum production time per unit is t hour.