You have been the operations manager for 5 years, but you have worked in the ope
ID: 2461394 • Letter: Y
Question
You have been the operations manager for 5 years, but you have worked in the operations department for more than 10 years. You know each product line very well including which products are more efficient to produce. The new CEO has asked you for production numbers below.
Each product line is manufactured in separate facilities with separate equipment. Total monthly overhead for each building is $10,000. Each facility has the same production capacity which is dependent on the product type. Regardless of facility capacity per building is 200 per month for Supreme, 250 per month for Standard, and 400 per month for Basic.
You currently manufacture the number of chairs based on average sales from the prior month. However, you are not currently manufacturing to capacity. The capacity per unit is below but you will need to obtain the average sales volume to determine:
Productivity per unit
Total cost to produce per unit
Machine rate is $25 per hour and labor rate is $30 per hour for all products. The Supreme requires 12 machine hours and 18 labor hours each to produce. The Standard requires 5 machine hours and 10 labor hours. The Basic requires 3 machine hours and 5 labor hours. Material costs are $1100 for the Supreme, $800 for Standard and $300 for the Basic
Units Needed
Supreme
Standard
Basic
Labor Productivity
Machine Productivity
Multi-Factor Productivity
Capacity
Supreme
Standard
Basic
Labor Productivity
Machine Productivity
Multi-Factor Productivity
Units Needed
Supreme
Standard
Basic
Labor Productivity
Machine Productivity
Multi-Factor Productivity
Explanation / Answer
Where Total Machine Cost for Supreme is 30(units)*12(hours each)* 25(Machine rate) = $9000,
Total Labor Cost for Supreme is 30(Units)*18(hours)*30(Labour Rate) = $16200
Total Cost for supreme = Total machine cost + Total Labour cost+ Material*30+building OH =
= 9000+16200+1100*30+10000= $68200
Cost each Supreme = 68200/30 (Units) = $ 2273.33
Supreme Standard Basic Capacity 200 250 450 Needed 30 10 50 Material Costs 1100 800 300 Machine Hours 12 5 3 Machine Rate 25 25 25 Total Machine 9000 1250 3750 Labor Hours 18 10 5 Labor Rate 30 30 30 Total Labor 16200 3000 7500 Building Overhead 10000 10000 10000 Total Cost to Produce 68200 22250 36250 Cost Each 2273.333333 2225 725Related Questions
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