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Question 3 A farmer estimates that if he harvests his olives now, he will obtain 10,000 kg which he can sell at $3.00 per kg. However, he estimates that he can obtain an additional 2000 kg of olives for each week he delays harvesting. In addition, it's likely that he will have spoilage of approximately 300 kg per week for each week he delays harvesting. At the same time, the price will drop at the rate of 0.25 $ per kg per week. When should he harvest his olives to obtain the largest cash return? Solution Engineering Economy Chapter 2 Question 4 A civil engineer has been promoted to manager of engineered public systems. One of the products is an emergency intercept pump for potable water. If the tested water quality or volume varies by a preset percentage. The pump automatically switches to preselected options of treatments or water sources. The manufacturing process for the pump had the following fixed and variable costs over a 1-year-period. Fixed Cost Variable cost per unit Administrative salaries and benefits 30,000$ Materials 2,500$ 20% of equipment cost 350,000$ Labor 200$ Space 100,000$ Indirect labor 2,000$ Utilities 55,000$ Subcontractors 800$ 1/3 of Computers cost 150,000$ 1- Determine the minimum revenue per unit to breakeven at the current production volume of 5000 units per year. 2- If selling internationally and to large corporations is pursued, and increased production of 3000 additional units will be necessary. Determine the revenue per unit required if a profit goal of 500,000$ is set for the entire product line. Assume the cost estimates above remain the same. Solution

Question 3
A farmer estimates that if he harvests his olives now, he will obtain 10,000 kg which he can sell at
$3.00 per kg. However, he estimates that he can obtain an additional 2000 kg of olives for each week
he delays harvesting. In addition, it's likely that he will have spoilage of approximately 300 kg per
week for each week he delays harvesting. At the same time, the price will drop at the rate of
0.25 $ per kg per week. When should he harvest his olives to obtain the largest cash return?
Solution
Engineering Economy
Chapter 2
Question 4
A civil engineer has been promoted to manager of engineered public systems. One of the products
is an emergency intercept pump for potable water. If the tested water quality or volume varies by a
preset percentage. The pump automatically switches to preselected options of treatments or water
sources. The manufacturing process for the pump had the following fixed and variable costs over a
1-year-period.
Fixed Cost
Variable cost per unit
Administrative salaries
and benefits
30,000$
Materials
2,500$
20% of equipment cost
350,000$
Labor
200$
Space
100,000$
Indirect labor
2,000$
Utilities
55,000$
Subcontractors
800$
1/3 of Computers cost
150,000$
1- Determine the minimum revenue per unit to breakeven at the current production volume of
5000 units per year.
2- If selling internationally and to large corporations is pursued, and increased production of
3000 additional units will be necessary. Determine the revenue per unit required if a profit
goal of 500,000$ is set for the entire product line. Assume the cost estimates above remain
the same.
Solution

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