A machine part to be machined may be made either from an alloy of aluminum or steel. There is an order for 7,000 units. Steel costs ₱8.00 per kg, while aluminum costs ₱13.00 per kg. If steel is used, the steel per unit weighs 100 grams; for aluminum, 25 grams. When steel is used, 60 units can be produced per hour; for aluminum, 100 units per hour with the aid of a tool costing ₱800.00, which will be useless after the 8,000 units are finished. The cost of the machine and operator is ₱100.00 per hour. If all other costs are identical, determine which material will be more economical.
A machine part to be machined may be made either from an alloy of aluminum or steel. There is an order for 7,000 units. Steel costs ₱8.00 per kg, while aluminum costs ₱13.00 per kg. If steel is used, the steel per unit weighs 100 grams; for aluminum, 25 grams. When steel is used, 60 units can be produced per hour; for aluminum, 100 units per hour with the aid of a tool costing ₱800.00, which will be useless after the 8,000 units are finished. The cost of the machine and operator is ₱100.00 per hour. If all other costs are identical, determine which material will be more economical.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter13: The Balanced Scorecard: Strategic-based Control
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A machine part to be machined may be made either from an alloy of aluminum or steel. There
is an order for 7,000 units. Steel costs ₱8.00 per kg, while aluminum costs ₱13.00 per kg. If
steel is used, the steel per unit weighs 100 grams; for aluminum, 25 grams. When steel is
used, 60 units can be produced per hour; for aluminum, 100 units per hour with the aid of a
tool costing ₱800.00, which will be useless after the 8,000 units are finished. The cost of the
machine and operator is ₱100.00 per hour. If all other costs are identical, determine which
material will be more economical.
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