4 Problem 10-18 6.66 points A production process consists of a three-step operat

Question

4 Problem 10-18 6.66 points A production process consists of a three-step operation. The scrap rate is 12 percent for the first step and 11 percent for the other two steps Skipped o. If the desired daily output is 452 units, how many units must be started to allow for loss due to scrap? (Do not round intermediate calculations. Round up your final answer to the next whole number.) Book References b. If the scrap rate for each step could be cut in half at every operation, how many units would this save in terms of the scrap allowance? (Do not round intermediate colculetions. Round up your finel answer to the next whole number) Number of units c. If the scrap represents a cost of $10 per unit, how much is it costing the company per day for the original scrap rate (l.e. the Part a scrap rate)? (Round your final answer to the nearest whole number. Omit the "$" sign in your response.) prev 4 of 15 #: Next >

Explanation / Answer

Explanation: All the numbers are in rounded off figure.

Lets Start with 1000 units.
In first step scrap rate is 12% = 1000 x (100% - 12%) = 880 units after the first step
In second step scrap rate is 11% =880 x (100% - 11%) = 783 units after the second step
In third step scrap rate is 11% =783 x (100% - 11%) = 696 units after the third step

Question A: If the desired daily output is 452 units, how many units must be started to allow for loss due to scrap?

Answer A: 452 x (1000 / 696) = 649 units to start with

Question B: If the scrap rate for each step could be cut in half at every operation, how many units would this save in terms of the scrap allowance?

Answer B:
Start with another 1000 units:
1000 x (100% - 6%) = 940 units after the first step
940 x (100% - 5.5%) = 888 units after the second step
888 x (100% - 5.5%) = 839 units after the third step
452 x (1000 / 839) = 538 units to start with under the improved procedure
649 - 538 = 111 units saved

Question C: If the scrap represents a cost of $10 per unit, how much is it costing the company per day for the original scrap rate?  

Answer C:

(649 - 452) units x $10 = $1970 daily cost in scrapped units

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