En Cima Appendix_4[1]
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Appendix 4 Cost-Benefit Analysis In-House Manufacturing vs. Subcontracting
In-House Business permits Major renovations Equipment: Juki sewing machines Ironing equipment chairs & tables Edging machines Buttonhole machines Total Equipment cost TOTAL
No. of units
Initial Cash Outlay Unit cost Total Cost P 5,000 395,000
10 2
P 33,000 13,000
5 5
42,000 38,000
330,000 26,000 50,000 210,000 190,000 806,000 P 1,206,000
Subcontracting
TOTAL
Total Cost
None
Year 1 In-House Direct Materials Direct Labor (sewers) plus 10% benefits Indirect Materials Total Variable Costs
No. of units
Unit cost
12
P 8,000 800
Factory Overhead: Indirect Labor
10
P 7000
Plant Administrative costs
4
12,500
Factory Supplies
25,000
Plant Rental Fees
55,000
Depreciation of Equipment 25,00 0 40,30 0 35,00 0 20,00 0
Utilities Repair & Maintenance Transportation Insurance Total Fixed Costs TOTAL
In-House Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Total Fixed Costs TOTAL
No. of units 12 12
Total Cost P 3,473,378* 96,000 9,600 173,669 P 3,752,647 P 840,000 600,00 0 300,00 0 660,00 0 80,60 0 300,00 0 483,60 0 420,00 0 240,00 0 P 3,924,200 P 7,676,847
Year 2 Unit cost Total Cost P 3,566,964* P 8,000 96,000 800 9,600 178,348 P 3,850,912 P 3,924,200 P 7,775,112
Subcontracting Direct Materials Direct Labor
TOTAL
Subcontracting Direct Materials Direct Labor
TOTAL
Total Cost P 3,473,378* 3,639,696*
P 7,113,074
Total Cost P 3,566,964* 3,737,762*
P 7,304,726
In-House Additional machines Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Additional Depreciation Repair & Maintenance Fixed Costs Total Fixed Costs TOTAL
Year 3 Unit cost Total Cost P 33,000 P 66,000 P 66,000 5,677,781* P 8,000 112,000 800 11,200 283,889 P 6,084,870 6,600 3,300 3,924,200 P 3,934,100 P 10,018,970
No. of units 2
14 14
Year 4 Unit cost
No. of units
In-House Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Additional Depreciation Additional Repair & Maintenance
14 14
P 8,000 800
Fixed Costs Total Fixed Costs TOTAL
Total Cost P 6,140,304* 112,000 11,200 307,015 P 6,263,504 6,600 3,300 3,924,20 0 P 3,934,100 P 10,197,604
Subcontracting
Total Cost
Direct Materials Direct Labor
P 5,677,781* 5,702,178*
TOTAL
P 11,379,959
Subcontracting Direct Materials Direct Labor
Total Cost P 6,140,304* 6,412,744*
TOTAL
P 12,533,048
Year 5 In-House Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Additional Depreciation Repair & Maintenance Fixed Costs Total Fixed Costs TOTAL
No. of units
Unit cost
14 14
P 8,000 800
Total Cost P 6,358,072* 112,000 11,200 317,904 P 6,799,176 6,600 3,300 3,924,200 P 3,934,100 P 10,733,276
Subcontracting Direct Materials Direct Labor
Total Cost P 6,358,072a 6,647,083*
TOTAL
P 13,005,155
In-House Business permits Major renovations Equipment: Juki sewing machines Ironing equipment chairs & tables Edging machines Buttonhole machines Total Equipment cost TOTAL
No. of units
Initial Cash Outlay Unit cost Total Cost P 5,000 395,000
10 2
P 33,000 13,000
5 5
42,000 38,000
330,000 26,000 50,000 210,000 190,000 806,000 P 1,206,000
Subcontracting
TOTAL
Total Cost
None
Year 1 In-House Direct Materials Direct Labor (sewers) plus 10% benefits Indirect Materials Total Variable Costs
No. of units
Unit cost
12
P 8,000 800
Factory Overhead: Indirect Labor
10
P 7000
Plant Administrative costs
4
12,500
Factory Supplies
25,000
Plant Rental Fees
55,000
Depreciation of Equipment 25,00 0 40,30 0 35,00 0 20,00 0
Utilities Repair & Maintenance Transportation Insurance Total Fixed Costs TOTAL
In-House Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Total Fixed Costs TOTAL
No. of units 12 12
Total Cost P 3,473,378* 96,000 9,600 173,669 P 3,752,647 P 840,000 600,00 0 300,00 0 660,00 0 80,60 0 300,00 0 483,60 0 420,00 0 240,00 0 P 3,924,200 P 7,676,847
Year 2 Unit cost Total Cost P 3,566,964* P 8,000 96,000 800 9,600 178,348 P 3,850,912 P 3,924,200 P 7,775,112
Subcontracting Direct Materials Direct Labor
TOTAL
Subcontracting Direct Materials Direct Labor
TOTAL
Total Cost P 3,473,378* 3,639,696*
P 7,113,074
Total Cost P 3,566,964* 3,737,762*
P 7,304,726
In-House Additional machines Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Additional Depreciation Repair & Maintenance Fixed Costs Total Fixed Costs TOTAL
Year 3 Unit cost Total Cost P 33,000 P 66,000 P 66,000 5,677,781* P 8,000 112,000 800 11,200 283,889 P 6,084,870 6,600 3,300 3,924,200 P 3,934,100 P 10,018,970
No. of units 2
14 14
Year 4 Unit cost
No. of units
In-House Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Additional Depreciation Additional Repair & Maintenance
14 14
P 8,000 800
Fixed Costs Total Fixed Costs TOTAL
Total Cost P 6,140,304* 112,000 11,200 307,015 P 6,263,504 6,600 3,300 3,924,20 0 P 3,934,100 P 10,197,604
Subcontracting
Total Cost
Direct Materials Direct Labor
P 5,677,781* 5,702,178*
TOTAL
P 11,379,959
Subcontracting Direct Materials Direct Labor
Total Cost P 6,140,304* 6,412,744*
TOTAL
P 12,533,048
Year 5 In-House Direct Materials Direct Labor (sewers) plus 10% fringe benefits Indirect Materials Total Variable Costs Additional Depreciation Repair & Maintenance Fixed Costs Total Fixed Costs TOTAL
No. of units
Unit cost
14 14
P 8,000 800
Total Cost P 6,358,072* 112,000 11,200 317,904 P 6,799,176 6,600 3,300 3,924,200 P 3,934,100 P 10,733,276
Subcontracting Direct Materials Direct Labor
Total Cost P 6,358,072a 6,647,083*
TOTAL
P 13,005,155
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