# Pm 592 Week 2

Topics: Cost, Costs, Price Pages: 4 (1092 words) Published: September 11, 2011
Instructions: Please complete all 3 multi-part problems for this week's assignment. 2-1 Basic Estimating Problem
Your company is installing a new piece of machining equipment and a robotic arm. Your manager asks for the project costs by cost category as well as the total amount. Given the following information, develop a base cost estimate by grouping costs by Equipment / Material (items 1 – 4), Installation / Labor (items 5 and 6), and Overhead (items 7-9). 1. Two pieces of equipment costing \$ 15,000 and \$ 35,000 2. Material required for electrical hook-up is 400 feet at \$ 25 per foot 3. Controls for each piece of equipment are estimated at \$ 600 each 4. Required start-up material is 3,700 pounds at \$ 2.70 per pound 5. Company labor for installation requires two maintenance specialists for two days at eight hours per day and \$ 35 per hour 6. Contract labor is estimated at a fixed price of \$ 7,500 7. Engineering is estimated to be 15% of (equipment / material) cost based on past experience 8. Inspection is estimated to be 3% of (labor) cost based on past experience 9. General and Administrative expenses are estimated to be 5% of the total of (equipment / material) and (labor) based on past experience. Note: For this problem, only items 5 and 6 are considered "labor" for the purpose of calculating items 8 and 9. Check answer: Total project cost = \$94,737.60

Equipment Costs| | \$15,000.00| \$35,000.00| \$50,000.00| Elcetrical Hook-up| | 400 Feet| \$25.00/Ft| \$10,000.00| | | | | |
Equipment Controls| | 2| \$600.00| \$1,200.00|
Start-up Materials| | 3700 Lbs| \$2.70/Lb| \$9,990.00|
| | | | |
Total Equipment & Material| | | \$71,190.00|
| | | | |
Personnel| | 32| \$35.00| \$1,120.00|
2/day for 8 hours| | Hours| Per Hour| |
| | | | |
Contract Labor Fixed Costs| | \$7,500.00| \$7,500.00|
| | | | |
Total Installation & Labor| | | \$8,620.00|
| | | | |...