Assignment Chapter 16

Assignment 16.1

Year = 1985	Year = 2007
$35 000	-
C= 100ft³/min	C= 1000 ft³/min

Year: 2007- 1985 = 22 years | cost increase 5% per year

5/100 x 22 x $35 000 = $38 500

Cost = $38 500 + 35 000 = $ 73 500

Assignment 16.3

Cost of tooling, CS = $600 and CH  = $7500

Cost of tool setup, SS = $100 and SH = $60

Cost to make one part, CPS = $3.40 and CPH = $0.80

Parts are made in batches, b (lots) of 500 units

The break-even point is the sales or production volume at which sales and costs balance:

CH + [QBEP/b] SH + CPH QBEP = CS + [QBEP/b] + SS + CPS QBEP

Break even point:

QBEP = CH – CS / [(SS – SH) / b] + (CPS - CPH)]

            = 7500 – 600 / [(100 – 60) / 500] + (3.4 – 0.8)]

            = 2574.63

            = 2575 units

Since the total production is expected to be 5000 units, the best decision is to use hard tooling if the time required to make to tools and prepare the production machines is compatible with the product development schedule. The break-even point which is 2575 units gives the total production at which the hard tooling approach becomes more cost effective than soft tooling

Assignment 16.4

Total Fixed Cost

= 950 000 + 180 000 + 50 000 + 120 000 + 60 000 + 10 000 + 90 000 + 120 000 + 100 000

= $ 1680 000

Total Variable Cost

=2150 000 + 60 000 + 70 000 + 30 000

=$ 2310 000

Total Cost = 1680 000 + 2310 000 = $3990 000

Manufacturing Cost per Unit = $ 3990 000

Total Manufacturing Cost = $ 239 400 000

115/100 x 3990 000 = $ 4588 500 = Selling Price.

Assignment 16.5

A jewel case = 20 gram ($ 2.20/lb)

OH = 40% G & A = 15% Profit = 10%

Estimated sell price

1 lb = 454 gram

1 gram = 2.2x10¯³ lb

(2.2x10¯³) x 20 x 2.20 = $0.097/unit

$20/1400= $0.014 per unit.

Total cost = 0.097 + 0.014 = $0.111

Cost/Hour = $0.111 x 1400 = $155.4

40/100 x 155.4 = $62.16

15/100 x 155.4 = $23.31

Total = 155.4 + 62.16 + 23.31 = $240.87

Profit = 110/100 x 240.87 = $264.96

$264.96/1400 unit = $0.19 per unit.