1. The purchased cost of a shell-and-tube heat exchanger (floating head and carbon-steel tubes) with 100 ft2 of heating surface was $3000 in 1980. What will be the purchased cost of a similar heat exchanger with 200 ft2 of heating surface in 1980 if the purchased-cost-capacity exponent is 0.60 for surface area ranging from 100 to 400 ft2? If the purchased-cost-capacity exponent for this type of exchanger is 0.81 for surface areas ranging from 400 to 2000 ft2, what will be the purchased cost of a heat exchanger with 1000 ft2 of heating surface in 1985?
2. Plot the 1985 purchased cost of the shell-and-tube heat exchanger outlined in the previous problem as a function of the surface area from 100 to 2000 ft2. Note that the purchased-cost-capacity exponent is not constant over the range of surface area requested.
3. The purchased and installation costs of some pieces of equipment are given as a function of weight rather than capacity. An example of this is the installed costs of large tanks. The 1980 cost for an installed aluminum tank weighing 100,000 lb was $390,000. For a size range from 200,000 to 1,000,000 lb, the installed cost-weight exponent for aluminum tanks is 0.93. If an aluminum tank weighing 700,000 lb is required, what is the present capital investment needed?
4. What weight of installed stainless-steel tank could have been obtained for the same capital investment as in the previous problem? The 1980 cost for an installed 304 stainless-steel tank weighing 300,000 lb was $670,000. The installed cost-weight exponent for stainless tanks is 0.88 for a size range from 300,000 to 700,000 lb.
5. The purchased cost of a 1400-gal stainless-steel tank in 1980 was $7500. The tank is cylindrical with flat top and bottom, and the diameter is 6 ft. If the entire outer surface of the tank is to be covered with 2 in. thickness of magnesia block, estimate the present total cost for the installed and insulated tank. The Jan. 1, 1980 cost for the 2-in. magnesia block was $2.20 per ft2 while the labor for installing the insulation was $5.00 per ft2.
6. A one-story warehouse 120 by 60 ft is to be added to an existing plant. An asphalt-pavement service area 60 by 30 ft will be added adjacent to the warehouse. It will also be necessary to put in 500 lin ft of railroad siding to service the warehouse. Utility service lines are already available at the warehouse site. The proposed warehouse has a concrete floor and steel frame, walls, and roof. No heat is necessary, but lighting and sprinklers must be installed. Estimate the total cost of the proposed addition. Consult App. B for necessary cost data.
7. The purchased cost of equipment for a solid-processing plant is $500,000. The plant is to be constructed as an addition to an existing plant. Estimate the total capital investment and the tied-capital investment for the plant. What percentage and amount of the fixed-capital investment is due to wst for land and contractor's fee?
8. The purchased-equipment cost for a plant which produces pentaerythritol (solid-fuel-processing plant) is $300,000. The plant is to be an addition to an existing formaldehyde plant. The major part of the building cost will be for indoor construction, and the contractor's fee will be 7 percent of the direct plant cost. All other costs are close to the average values found for typical chemical plants. On the basis of this information, estimate the following:
(a) The total direct plant cost.
(b) The fixed-capital investment.
(c) The total capital investment.
9. Estimate by the turnover-ratio method the fixed-capital investment required for a proposed sulfuric acid plant (battery limit) which has a capacity of 140,000 tons of 100 percent sulfuric acid per year (contact-catalytic process) using the data from Table 19 for 1990 with sulfuric acid cost at $72 per ton. The plant may be considered as operating full time. Repeat using the cost-capacity-exponent method with data from Table 19.
10. The total capital investment for a chemical plant is $1 million, and the working capital is $100,000. If the plant can produce an average of 8000 kg of final product per day during a 365-day year, what selling price in dollars per kilogram of product would be necessary to give a turnover ratio of 1.0?
11. A process plant was constructed in the Philadelphia area (Middle Atlantic) at a labor COSt of $200,000 in 1980. What would the average costs for the same plant to be in the Miami, Florida area (South Atlantic) if it were constructed in late 1988? Assume, for simplicity, that the relative labor rate and relative productivity factor remain essentially constant.
12. A company has been selling a soap containing 30 percent by weight water at a price of $10 per 100 lb f.o.b. (i.e., freight on board, which means the laundry pays the freight charges). The company offers an equally effective soap containing only 5 percent water. The water content is of no importance to the laundry, and it is willing to accept the soap containing 5 percent water if the delivered costs are equivalent. If the freight rate is 70 cents per 100 lb, how much should the company charge the laundry per 100 lb f.o.b. for the soap containing 5 percent water?
13. The total capital investment for a conventional chemical plant is $1,500,000, and the plant produces 3 million kg of product annually. The selling price of the product is
$0.82/kg. Working capital amounts to 15 percent of the total capital investment. The investment is from company funds, and no interest is charged. Raw-materials costs for the product are $0.09/kg, labor $0.08/kg, utilities $0.05/kg, and packaging $0.008/kg. Distribution costs are 5 percent of the total product cost. Estimate the following:
(a) Manufacturing cost per kilogram of product.
(b) Total product cost per year.
(c) Profit per kilogram of product before taxes.
(d) Profit per kilogram of product after taxes (use current rate).
14. Estimate the manufacturing cost per 100 lb of product under the following conditions:
Fixed-capital investment = $2 million Annual production output =10 million lb of product Raw materials cost = $0.12/lb of product Utilities
100 psig steam = 50 lb/lb of product Purchased electrical power = 0.4 kWh/lb of product Filtered and softened water = 10 gal/lb of product Operating labor = 20 men per shift at $12.00 per employee-hour Plant operates three hundred 24-h days per year Corrosive liquids are involved Shipments are in bulk carload lots A large amount of direct supervision is required There are no patent, royalty, interest, or rent charges
Plant-overhead costs amount to 50 percent of the cost for operating labor, supervision, and maintenance
15. A company has direct production costs equal to 50 percent of total annual sales and fixed charges, overhead, and general expenses equal to $200,000. If management proposes to increase present annual sales of $800,000 by 30 percent with a 20 percent increase in fixed charges, overhead, and general expenses, what annual sales dollar is required to provide the same gross earnings as the present plant operation? What would be the net profit if the expanded plant were operated at full capacity with an income tax on gross earnings fixed at 34 percent? what would be the net profit for the enlarged plant if total annual sales remained the same as at present? What would be the net profit for the enlarged plant if the total annual sales actually decreased to $700,000?
16. A process plant making 2000 tons per year of a product selling for $0.80 per lb has annual direct production costs of $2 million at 100 percent capacity and other fixed costs of $700,000. What is the fixed cost per pound at the break-even point? If the selling price of the product is increased by 10 percent, what is the dollar increase in net profit at full capacity if the income tax rate is 34 percent of gross earnings?
17. A rough rule of thumb for the chemical industry is that $1 of annual sales requires $1 of fixed-capital investment. In a chemical processing plant where this rule applies, the total capital investment is $2,500,000 and the working capital is 20 percent of the total capital investment. The annual total product cost amounts to $1,500,000. If the national and regional income-tax rates on gross earnings total 36 percent, determine the following:
(a) Percent of total capital investment returned annually as gross earnings. Percent of total capital investment returned annually as net profit.
18. The total capital investment for a proposed chemical plant which will produce worth of goods per year is estimated to be $1 million. It will be necessary to do a considerable amount of research and development work on the project before the final plant can be constructed, and management wishes to estimate the permissible research and development costs. It has been decided that the net profits from the plant should be sufficient to pay off the total capital investment plus all research and development costs in 7 years. A return after taxes of at least 12 percent of sales must be obtained, and 34 percent of the research and development cost is tax-free (i.e., income-tax rate for the company is 34 percent of the gross earnings). Under these conditions, what is the total amount the company can afford to pay for research and development?
19. A chemical processing unit has a capacity for producing 1 million kg of a product per year. After the unit has been put into operation, it is found that only 500,000 kg of the product can be disposed of per year. An analysis of the existing situation shows that all fixed and other invariant charges, which must be paid whether or not the unit is operating, amount to 35 percent of the total product cost when operating at full capacity. Raw-material costs and other production costs that are directly proportional to the quantity of production (i.e., constant per kilogram of product at any production rate) amount to 40 percent of the total product cost at full capacity. The remaining 25 percent of the total product cost is for variable overhead and miscellaneous expenses, and the analysis indicates that these costs are directly proportional to the production rate during operation raised to the 1.5 power. What will be the percent change in total cost per kilogram of product if the unit is switched from the l-million-kg-per-year rate to a time and rate schedule which will produce 500,000 kg of product per year at the least total cost? All costs referred to above are on a per-kilogram basis.
20. Estimate the total operating cost per day for labor, power, steam, and water in a plant producing 100 tons of acetone per day from the data given in Table 22 and using utility costs from Table 23. Consider all water as treated city water. The steam pressure may be assumed to be 100 psig. Labor costs average $20 per employee-hour. Electricity must be purchased. Plant operates 365 days per year.
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