40. Cornell has two options for upgrading their athletic facilities. The off campus option costs only $2.5 million, but it will require frequent bus service to those facilities at an annual cost that starts at $200,000 and increases by 5% per year (buses, drivers and mechanics salaries, maintenance, road wear, etc) Improving the on-campus facilities will cost $5.0 million, but no extra transportation costs are required. Both options involve an estimated annual
maintenance cost of 1 million for about 30 years before new facilities will again be needed Using benefit-cost ratio analysis, determine which option is more economically efficient Use
an interest rate of 10% per year Contributed by D P Loucks Cornell University

Laval produces lamps and home lighting fixtures. its most popular product is a brushed aluminum desk lamp. this lamp is made from components shaped in the fabricating department and assembled in the assembly department. information related to the 22,000 desk lamps produced annually follows. direct materials $280,000direct labor fabricating department (8,000 dlh × $24 per dlh) $192,000assembly department (16,600 dlh × $26 per dlh) $431,600machine hours fabricating department $15,200mhassembly department $20,850mhexpected overhead cost and related data for the two production departments follow. fabricating assemblydirect labor hours 150,000dlh 295,000dlhmachine hours 161,000mh 128,000mhoverhead cost $400,000 430,000required1. determine the plantwide overhead rate for laval using direct labor hours as a base.2. determine the total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate.3. compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department.4. use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.