Alasala Colleges
College of Engineering
EGR 401 – Engineering Economy & Ethics
Semester 2 2024/2025
Homework 1
Due Date: 12/2/2025
Name: __________________________________ ID#: _________________ Section:______
Problem Mark Grades
1 1
2 1
3 1
4 1
5 1
Total 5
1. Use this page as cover page.
2. You must show the full solution to get full credit.
3. Only handwritten solutions will be graded.
4. Box your final answer.
5. Two points will be detected if you do not use a cover page.
1. The fixed cost at Harley Motors is $5.700 million annually. The main product has
revenue of $80.0 per unit and $45 variable cost.
a) Estimate the breakeven quantity per year
b) Estimate the annual profit or loss when 107,000 units are sold
c) Estimate the annual profit or loss when (use the last 6 digits of your student ID, Ex:
E12345678 then use 345678) units are sold.
2. Handheld fiber optic meters with white light polarization interferometry are useful for
measuring temperature, pressure, and strain in electrically noisy environments.
The fixed costs associated with manufacturing are $(use the last 6 digits of your
student ID, Ex: E12345678 then use 345678) per year. If variable costs are $290 per
unit and the company sells 3,200 units per year, at what selling price per unit will
the company break even?
3. One of your firm’s suppliers discounts prices for larger quantities. The first 1000 parts
are $13 each. The next 2000 are $12 each. All parts in excess of 3000 cost $11 each.
a) What is the average cost per part for 2500 Units?
b) What is the marginal cost per part for 2500 Units?
4. Calculate the time required to produce the hundredth unit of a production run if the
first unit took 32.0 minutes to produce and the learning-curve rate for production is
80%.
5. You started a company selling staplers. You purchased equipment and office space
that costs money each year to maintain. Two times now, you have had to repair the
equipment when it’s broken. You are considering upgrading your equipment and
process to save money on labor and materials. The following table shows its costs and
benefits:
Original equipment and space: $100,000
Annual maintenance: $2000
Repair cost: $400
Current Production: 10,000 units/year
Current sell price: $5/staplers
Current labor: $2/stapler
Currents material: $1/stapler
Cost of upgrading equipment: $3000
Upgraded labor: $1.50/stapler
Upgraded material $0.90/stapler
a) Identify a sunk cost
b) Identify a fixed cost
c) Identify a variable cost
e) Identify a non-recurring cost
f) What is the current marginal cost
g) What is the incremental cost per unit (between current and upgraded cost).
h) Suggest one example of an external cost
