Unlimited Designs, Inc. (UDI), a manufacturer of architectural stone and custom fabrications for
both residential and commercial customers, is considering the purchase of a new machine. Currently,
the business has three concrete mixers of varying ages (see photos) used to prepare a variety of
concrete mixes for their various products. The equipment is old, inefficient, and subject to frequent
breakdowns. If a new mixer is purchased, UDI would keep the best of the machines as a backup and
would sell the two older machines. It is estimated by management that they could sell Old Machine 1
for approximately $5,000 and Old Machine 2 for approximately $2,000.
Management has received a bid on a new machine (see brochure) from the manufacturer for
$178,054, but the bid does not include any shipping, sales tax or installation. Management estimates
shipping will run approximately $2,000. UDI will be able to install the machine using existing floor
space, but the project will require a significant amount of modifications. Two new overhead doors
will be needed at about $3,500 each. Electrical and water feeds will cost in the neighborhood of
$2,500. Also, management is allowing an additional $3,000 for bins and other modifications.
The old machines can each produce a ¼ yard batch in approximately 17 minutes. The machines are
run by two operators with an assistant aiding on both machines as needed (for about half of his shift.)
The cost of the operators wages (fully burdened for taxes and benefits) is approximately $25 per hour
each. Last year, the company produced approximately 1,500 yards of concrete on its various projects.
The company is currently under contract for several major projects which leads management to
believe that next years’ production will need to be about 2,500 yards. The new machine is capable of
producing ½ yard batches every 4 minutes. The new machine will require a full-time operator and a
full-time assistant.
The old equipment has significant maintenance costs. Due to the age and condition of the equipment,
a maintenance employee spends 30-45 minutes per day running maintenance on the machines.
Blades are replaced at a cost of $1,600 per blade (4 blades per mixer) about every 6-9 months. Each
of the three machines seems to need a major maintenance overhaul about every four years at a cost of
about $3,500. About 70% of the time, at least one of the three machines in inoperable (hence the
need for three machines.) In addition, the machines seem to go down for about 40-50 hours per year,
which cause about 15 laborers to sit idly during that period of time. (Consider the fully burdened cost
of laborers at about $20 per hour. It is unknown what the down time and maintenance costs would be
on the new machine, but it should be significantly reduced.
One might also assume that the new machine would be more energy efficient, but the savings there is
unknown.
Another major advantage of the new machine would be in the quality of the finished product. The
new machine will accurately measure the ingredients and moisture content of the mixes which would
help avoid color and consistency of batches. Currently, about 25% of the batches are requiring
rework which costs an average of $75 in labor and materials for each batch. Last year, the total cost
of rework is estimated to be about $25,000. The new machine should cut down on the inconsistency
by at least 80%.
UDI owns a hopper that is capable of filling the various molds. However, the speed of the mixing
process is so much slower than the process of filling the molds, that UDI has elected to have
employees shovel fill the molds. With the high speed of the new machine, the hopper could be used
to fill molds and significantly reduce the fill time. Currently, there are 2-3 laborers always working
on shovel-filling the molds. Using the hopper could cut down the filling time for as much as 80%.
The company is growing rapidly, from 5% - 25% per year over the past seven years. This years
projected growth is due to the addition of several major contracts, but the company estimates that it
will continue to operate at the new level going into the future, plus additional growth.
The company is capable of borrowing about 80% of the purchase price at a rate of 5.75% interest.
The balance would come for the equity of the company. Assume that the shareholders would
demand at return of at least 20% on their equity. UDI is a sub-chapter S corporation. As such,
assume that the combined state and federal tax is 38% (marginal).
You need to do is to create
1) Assumptions
2) Capital Budget Spreadsheet
3) Externalities
Manufactured by
828 4th Street
Elk River, MN 55330
Phone (763) 441-1581
Fax (763) 441-1596
Acromix batch plants occupy a compact envelope, with mixers sized
for your application. Acromix batch plant may be manufactured
complete with operator platform and ladder, overhead cement batching,
traveling weigh batcher and overhead aggregate storage (rim height on
a 17 cubic yard bin set is a user friendly 10’-0”). Acromix batch plants
are constructed and shipped in large components. Many are built on a
common frame.
www.ermc.com
Manufactured by
828 4th Street
Elk River, MN 55330
Phone (763) 441-1581
Fax (763) 441-1596
Acromix horizontal shaft mixers employ a
time tested and proven action with modern
durable design and construction. To give
you decades of reliable service
Low profile overhead aggregate storage with a
variety of bin sets
The Acromix traveling batcher and lifting arms
eliminate the need for messy conveyors. The
traveling batcher carriage is equipped with
compression load cells to measure only the
material placed in the batcher bucket
The typical Acromix batch plant employs
an hydraulic lifting system without the use
of sheaves, cables or winches. The
hydraulic cylinders are equipped with
counter-balance valves for a fail-safe
operation. In the rare and unlikely event of
power failure, or broken hydraulic hose,
the batcher bucket will stay in place, even
in an elevated position and under full load
www.ermc.com
Manufactured by
828 4th Street
Elk River, MN 55330
Phone (763) 441-1581
Fax (763) 441-1596
Overhead cement batching
provides the cleanest, most
efficient method for adding
cement to your mixer. ERMC
has a number of methods of
handling bulk cement.
Dual overhead powder batchers
provide efficient, clean and accurate
measurement of multiple powder
materials.
Acromix batch plants include manual controls as a
standard component. Upgrades include multiple
levels of Easy-Touch automation with optional
features including touch screen, full sheet printer,
automatic moisture compensation and data storage
Cement silos and screw conveyors are also
available from ERMC / Acromix.
www.ermc.com
Manufactured by
828 4th Street
Elk River, MN 55330
Phone (763) 441-1581
Fax (763) 441-1596
Mixers - Yours, theirs, or our
mixer will fit the Acromix batch
plant. While we naturally prefer
the Acromix mixer, we have
mounted units from other
manufacturers, and even existing
customers’ mixers.
The one yard-batch plant featured below employs an Acromix one-yard ribbon
style mixer with an additional stand prepared for the customer’s existing mixer
already at the jobsite. The Acromix plant will serve both mixers from a
common traveling weigh batcher and automation package.
www.ermc.com
Manufactured by
828 4th Street
Elk River, MN 55330
Phone (763) 441-1581
Fax (763) 441-1596
Acromix batch plants are designed and built to be used outdoors.
Acromix batch plants have a low profile and compact footprint. The bins
shown here will each store approximately 8.5 cubic yards measured water
level full and a rim height of 10’-0”. The precaster has employed an attractive
and relatively economical ramp to make bin charging even easier.
You may elect to protect your batch plant from the elements
The above installations illustrate the use of ramps and overhead garage doors
to provide easy access to the bins, with a minimum of required head room.
Moisture in the aggregates being stored is more controllable, spillage reduced,
and the garage doors can be locked down to prevent vandalism.
www.ermc.com
Manufactured by
828 4th Street
Elk River, MN 55330
Phone (763) 441-1581
Fax (763) 441-1596
The above photo illustrates the transfer of outdoor, bulk aggregate
material to indoor bin storage. The front end loader utilizes a hopper
(protected from the elements), and an electrically powered radial
conveyor to charge any of three bins
Bulk aggregate ground storage is illustrated above. The precaster
has paved the area and provided a pitch to the floor. The slight
incline from front to back provides a path for water drainage,
thereby keeping the aggregates at a more consistent moisture
content. You may consider covering the bulk bins for additional
protection from the elements.
www.ermc.com
Project Photos – Current Equipment
Best Mixer
Will be kept for backup
Hopper
Shovel Fill
Hopper is currently used to fill mixer, could be moved with new machine to help fill forms
Old Machine 1
Old Machine 2
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