A manager must decide which type of machine to buy: A, B or C. Machine fixed costs are: Machine Cost/year A $50,000 B $60,000 C $90,000 The company makes 4 products. Product forecasts and unit processing times on each machines are as follows: Processing time / unit (mins) Product Forecasts A B C 1 20000 3 4 2 2 15000 4 4 3 3 10000 5 6 4 4 40000 2 2 1 How many machines of each type would be needed to meet annual demand for all the products? Based on annual fixed costs, which type of machine will cost the least to satisfy the demand? (machines operate 10 hours a day, 250 days a year)
A manager must decide which type of machine to buy: A, B or C. Machine fixed costs are: Machine Cost/year A $50,000 B $60,000 C $90,000 The company makes 4 products. Product forecasts and unit processing times on each machines are as follows: Processing time / unit (mins) Product Forecasts A B C 1 20000 3 4 2 2 15000 4 4 3 3 10000 5 6 4 4 40000 2 2 1 How many machines of each type would be needed to meet annual demand for all the products? Based on annual fixed costs, which type of machine will cost the least to satisfy the demand? (machines operate 10 hours a day, 250 days a year)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...
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Question
A manager must decide which type of machine to buy: A, B or C. Machine fixed costs are:
|
Machine |
Cost/year |
|
A |
$50,000 |
|
B |
$60,000 |
|
C |
$90,000 |
The company makes 4 products. Product
|
|
|
Processing time / unit (mins) |
||
|
Product |
Forecasts |
A |
B |
C |
|
1 |
20000 |
3 |
4 |
2 |
|
2 |
15000 |
4 |
4 |
3 |
|
3 |
10000 |
5 |
6 |
4 |
|
4 |
40000 |
2 |
2 |
1 |
- How many machines of each type would be needed to meet annual demand for all the products?
- Based on annual fixed costs, which type of machine will cost the least to satisfy the demand? (machines operate 10 hours a day, 250 days a year)
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