ATTACHMENT II
Economic Comparison of a two-shift vs a three-shift operation
The following two exhibits point out the wide
difference in Fixed Costs between operating a two-shift
facility and a three-shift facility.
Exhibit A compares
the present Fixed Costs for the entire operation in Hong
Kong with the Fixed Cost required to duplicate our Hong Kong production level in Singapore where a third shift waiver is available. Exhibit B compares the present Fixed
Cost of an Integrated Circuit Product Line in Hong Kong with the Fixed Cost required to duplicate this production
level in Singapore.
For the purpose of these examples, the following
basic assumptions have been made :-
(1) The availability and expense of labour, raw ma-
terials, capital equipment and buildings are equal.
(2) Variable expenses as a function of employment and
production levels will equalize.
Exhibit A (Total Facility)
Fixed Cost
Hong Kong US$/month
Singapore US$/month
(1)
Machinery, Equipment and
Fixtures amortized over 5
years
60,000.00
40,000.00
(2)
Leasehold (rent) @ US 10.7 /sq. ft./month amortized over 20 years
17,000.00
11,500.00
{
(3)
All other fixed overhead
190,000.00
150,000.00
Total
267,000.00 201,500.00
1