Same as previous Problem 2.20, except that the machine will be operated three shifts, or 6000…

Same as previous Problem 2.20, except that the machine will be operated three shifts, or 6000 hr/yr. Note the effect of increased machine utilization on the hourly rate compared to the rate determined in Problem 2.20.

Problem 2.20

In the operation of a certain production machine, one worker is required at a direct labor rate = $10/hr. Applicable labor factory overhead rate = 50%. Capital investment in the system = $250,000, expected service life = 10 years, no salvage value at the end of that period, and the applicable machine factory overhead rate = 30%. The work cell will operate 2000 hr/yr. Use a rate of return of 25% to determine the appropriate hourly rate for this work cell.