1.11 Cunningham Performance Auto, Inc., modifies 375 autos per year. The manager

ID: 402882 • Letter: 1

Question

1.11 Cunningham Performance Auto, Inc., modifies 375

autos per year. The manager, Peter Cunningham, is interested in

obtaining a measure of overall performance. He has asked you to

provide him with a multifactor measure of last year%u2019s performance

as a benchmark for future comparison. You have assembled the following

data. Resource inputs were: labor, 10,000 hours; 500 suspension

and engine modification kits; and energy, 100,000

kilowatt-hours. Average labor cost last year was $20 per hour, kits

cost $1,000 each, and energy costs were $3 per kilowatt-hour. What

do you tell Mr. Cunningham?

total cost = (10000*20) [labour cost]+(500*1000) [Kits cost]+(100000*3) [Energy Cost]=1000000

so, the total cost = 10^6

cost to repiar 1 auto = 10^6 / 375 = 2666.67

So, we tell Mr. Cunningham that the cost of repair of each auto is on an average is $2666.67

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