Seldon Industries manufactures plastic bottles for the food

Seldon Industries manufactures plastic bottles for the food industry. On average,

SheldonSheldon

pays

$ 73$73

per ton for its plastics.

Sheldon\'sSheldon\'s

waste-disposal company has increased its waste disposal-charge to

$ 50$50

per ton for solid and inert waste.

SheldonSheldon

generates a total of

500500

tons of waste per month.

Sheldon\'sSheldon\'s

managers have been evaluating the production processes for areas to cut waste. In the process of making plastic bottles, a certain amount of machine \"drool\" occurs. Machine drool is the excess plastic that \"drips\" off the machine between molds. In the past,

SheldonSheldon

has discarded the machine drool. In an average month,

170170

tons of machine drool is generated. Management has arrived at three possible courses of action for the machine drool issue:

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(Click the icon to view the courses of action.)Read the requirements

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.

Requirement 1. What is the annual cost of the machine drool currently? Include both the original plastic cost and the waste-disposal cost.

Annual cost

Material cost of machine drool (plastic)

$148,920

Disposal cost

102,000

Total annual cost

$250,920

Requirement 2. How much would the company save per year (net) if the machine drool were to be sold to the local recycler? (Use parentheses or a minus sign to show amounts that will reduce the annual savings. If a box is not used in the table leave the box empty; do not select a label or enter a zero.)

Annual savings (net)

Amount received from local recycler

Reduction in waste-disposal costs

Total annual savings (net)

Choose from any list or enter any number in the input fields and then click Check Answer.

2

parts remaining

Final Check

More Info

1.

Do nothing and pay the increased waste-disposal charge.

2.

$10

3.

$40,000.

$10

	Annual cost
Material cost of machine drool (plastic)	$148,920
Disposal cost	102,000
Total annual cost	$250,920

Solution

Given Information:

1.Material Cost (Plastic Cost) =$ 73 per ton

2.Waste disposal Charge =$ 50 per ton

3.Waste Generated per month =500 tons

( Waste Generated per year =500 tons* 12 months =6000 tons)

4. Machine drool (Part of waste) generated per month = 170 tons per month

(Machine drool (Part of waste) generated per year= 170 tons*12 months =2040 tons)

Requirement 1 : Calculation of Annual Cost of Machine drool currently:-

Material cost (Plastic) of machine drool (2040 tons per year* 73 per ton)

$148,920

Disposal cost (2040 tons per year * 50 per ton)

102,000

Total annual cost of Machine Drool Currently

$250,920

Requirement 2: Savings per year (Net) if Machine drool were to be sold to local recycler :-

Annual savings (net) :-

Amount received from local recycler 20400

(2040 tons * 10 per ton)

Reduction in waste-disposal costs 148920

(2040 tons * 73 per ton)

Total annual savings (net) $16932

Feel free to ask any clarification if required. Please provide feedback by thumbs up if satisfied. It will be highly appreciated. Thank you.

Material cost (Plastic) of machine drool (2040 tons per year* 73 per ton)	$148,920
Disposal cost (2040 tons per year * 50 per ton)	102,000
Total annual cost of Machine Drool Currently	$250,920