Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 4

To automate one of its production processes, the Milwaukee Corporation bought three flexible manufacturing cells at a price of $400.000 each. When they were delivered, Milwaukee paid freight charges of $20,000 and handling fees of $15,000. Site preparation for these cells cost $45,000. Six foremen, each earning $20 an hour, worked five 40-hour weeks to set up and test the manufacturing cells. Special wiring and other materials applicable to the new manufacturing cells cost $3,500. Determine the cost basis (amount to be capitalized) for these cells.