### From: Brunk, Debra [mailto:DBrunk@AHAM.org]

Sent: Monday, March 15, 2010 10:14 AM

To: Judith Reich

Subject: RE: Questions on RCW Manufacturing Cost and Efficiency Submittals



### Judy,

I have had a chance to go through your questions and will try to answer:

1. The original aggregated incremental cost data I sent you had the numbers truncated,

which suggested that the min and max were outside of the average for the additional

calculations (Table B

‐ 2). I have taken all costs, for all tables, out to 2 decimal places.

Modified tables are attached.

2. As far as I know, the incremental costs are all relative to the baseline. These are the

instructions provided to us and what we provide to our members.

3. On the market share efficiency data, the levels correspond to those in the data

collection request. I have modified our submission to include the levels, to reduce

confusion. I have also split out the top and front load tables for clarity. I provided data

for the six levels listed in Table A

‐ 3 of the data collection request, with maximum values

at 2.25/4.45 for Top load and 2.89/3.36 for Front load. Updated tables are attached;

however, values have not changed.

If you have any additional questions, please let me know.

Best regards,

Debra

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Navigant Consulting, Inc.

Company Registrati on Number: UK Ltd. 3641719

Registered in Delaware, USA

Registered Office Address: 30 South Wacker Drive, Suit e 3400, Chicago, Illinois 60606Table A-1: Aggregate calculations on incremental cost data for Residential Clothes Washers - Top Load (updated)

n 33333

Effieicncy Level 12345

Material 2.77$ 6.05$ 9.33$ 18.05$ 50.21$

Labor 0.08$ 1.51$ 2.72$ 4.39$ 7.20$

Overhead 0.23$ 0.83$ 0.97$ 1.55$ 1.84$

n 33333

Material 2.28$ 5.01$ 7.83$ 14.72$ 37.13$

Labor 0.07$ 1.06$ 1.89$ 3.06$ 5.05$

Overhead 0.22$ 0.68$ 0.81$ 1.37$ 1.65$

n 33333

Material 3.25$ 7.10$ 10.80$ 21.37 $ 63.28$

Labor 0.08$ 2.03$ 3.70$ 5.95$ 9.56$

Overhead 0.24$ 0.98$ 1.12$ 1.73$ 2.02$

n 33333

Building CAPX 0.26$ 2.22$ 2.87$ 3.19$ 5.79$

Tooling/Equipment CAPX 1.25$ 32.76$ 34.97$ 38.57$ 55.09$

n 33333

R&D 0.70$ 1.19$ 2.08$ 5.07$ 7.78$

Marketing 0.23$ 0.24$ 1.54$ 2.88$ 5.06$

Table A

‐ 2: Aggregated Total Industry Cost

‐ Top Loa d

Average Material, Labor, OH Cost

‐ all (Million $) 16.2$ 44.2$ 68.6$ 126.4$ 312.2$

Minimum Material, Labor, OH Cost

‐ all(Million $) 13.5$ 35.5$ 55.5$ 101.0$ 231.0$

Maximum Material, Labor, OH Cost

‐ all (Million $) 18.8$ 53.3$ 82.3$ 153.1$ 394.5$

CAPX

‐ all (Million $) 10.1$ 75.6$ 86.6$ 110.9$ 175.4$

One

‐ Time Product Conversion

‐ all (Million $) 9.7 $ 20.1$ 27.8$ 62.9$ 87.3$ One

‐ Time Product Conversion Expenses (Million $) Top Load (Vertical Axis)

Average Incremental Cost

Minimum Incremental Cost

Maximum Incremental Cost

Conversion capital Expenditures (Million $)

Top Load (Vertical Axis)

Total Industry Costn 666 6 6

Effieicncy Level 1 2 3 4 5

Material 1.81$ 5.45$ 11.27$ 29.52$ 58.81$

Labor 0.16$ 0.36$ 3.73$ 8.16$ 11.25$

Overhead 0.16$ 0.28$ 0.73$ 1.21$ 2.07$

n 444 4 4

Material 0.02$ 0.42$ 1.29$ 14.74$ 30.17$

Labor 0.04$ 0.06$ 2.29$ 5.22$ 6.74$

Overhead 0.13$ 0.18$ 0.50$ 0.82$ 1.20$

n 444 4 4

Material 0.03$ 0.47$ 1.98$ 20.56$ 42.12 $

Labor 0.05$ 0.07$ 0.29$ 5.83$ 8.86$

Overhead 0.14$ 0.20$ 0.62$ 1.20$ 1.94$

n 555 5 5

Building CAPX 0.07$ 0.07$ 2.35$ 2.45$ 3.21$

Tooling/Equipment CAPX 0.78$ 0.79$ 10.97$ 17.01$ 22.57$

n 555 5 5

R&D 0.20$ 0.20$ 0.83$ 2.72$ 6.09$

Marketing 0.33$ 0.33$ 2.27$ 3.19$ 5.39 $

Table B

‐ 2: Aggregated Total Industry Cost

‐ Front Loa d

Average Material, Labor, OH Cost

‐ all (Million $) 6.5$ 18.4$ 47.5$ 117.5$ 218.0$

Minimum Material, Labor, OH Cost

‐ all(Million $) 0.6$ 2.0$ 12.3$ 62.8$ 115.2$

Maximum Material, Labor, OH Cost

‐ all (Million $) 0.6$ 2.2$ 8.7$ 83.4$ 159.9$

CAPX

‐ all (Million $) 13.7$ 14.1$ 173.3$ 218.0$ 276.1 $

One

‐ Time Product Conversion

‐ all (Million $) 8.8$ 10.3$ 36.2$ 61.2$ 103.6$

Total Industry Cost 29.0$ 42.8$ 257.0$ 396.6$ 597.6$ Front Load (Horizontal Axis) Table B-1: Aggregate calculations on incremental cost data for Residential Clothes Washers (all data) - Front Load

(updated)

Average Incremental Cost

Minimum Incremental Cost

Maximum Incremental Cost

Conversion capital Expenditures (Million $)

One

‐ Time Product Conversion Expenses (Million $)

Note 1: Min and Max values are not consistent with the average values as we received 6 responses for average costs, and 4

responses for minimum and maximum costs. A separate summary table is provided for average, min and max all determined from

four responses.

Note 2: Red values for labor costs under efficiency level 5 indicate one less response. For this series of data, the labor costs are an

aggregate of 5 responses. Front Load (Horizontal Axis)

Total Industry Costn 44444

Effieicncy Level 12345

Material 0.03$ 0.45$ 1.62$ 17.72$ 35.92$

Labor 0.04$ 0.06$ 3.17$ 7.46$ 9.73$

Overhead 0.13$ 0.19$ 0.56$ 1.00$ 1.57$

n 44444

Material 0.02$ 0.42$ 1.29$ 14.74$ 30.17$

Labor 0.04$ 0.06$ 2.29$ 5.22$ 6.74$

Overhead 0.13$ 0.18$ 0.50$ 0.82$ 1.20$

n 44444

Material 0.03$ 0.47$ 1.98$ 20.56 $ 42.12$

Labor 0.05$ 0.07$ 0.29$ 5.83$ 8.86$

Overhead 0.14$ 0.20$ 0.62$ 1.20$ 1.94$

n 44444

Building CAPX

‐ $

‐ $ 0.21$ 0.31$ 1.06$

Tooling/Equipment CAPX 0.00$ 0.01$ 4.47$ 10.51$ 16.07$

n 44444

R&D 0.00$ 0.01$ 0.31$ 2.20$ 5.57$

Marketing 0.00$ 0.01$ 1.49$ 2.41$ 4.61 $

Average Material, Labor, OH Cost

‐ subset (Million $) 0.61$ 2.1$ 16$ 79$ 143$

Minimum Material, Labor, OH Cost

‐ subset (Million $) 0.58$ 2.0$ 12$ 63$ 115$

Maximum Material, Labor, OH Cost

‐ subset (Million $) 0.64$ 2.2$ 9$ 83$ 160$

CAPX

‐ subset (Million $) 0.73$ 1.1$ 40.3$ 85.0 $ 143.1$

One

‐ Time Product Conversion

‐ subset (Million $) 0.82$ 2.3$ 16.2$ 41.2$ 83.6$

Total Industry Cost 2.2$ 5.5$ 72.6$ 205.2$ 369.3$ Table B-3: Aggregate calculations on incremental cost data for Residential Clothes Washers (subset) - Front Load

(updated)

Minimum Incremental Cost

Maximum Incremental Cost

Conversion capital Expenditures (Million $)

One

‐ Time Product Conversion Expenses (Million $) Front Load (Horizontal Axis)

Average Incremental Cost

Note 1: Average, min and max values are consistent, with four responses.

Note 2: Red values for labor costs under efficiency level 5 indicate one less response. For this series of data, the labor costs are

an aggregate of 3 responses. Total Industry Cost Front Load (Horizontal Axis)