Problem 1:ABC produce a special type of boat to be used by Navy. A 90% learning curve is expected to apply tothe production of this type of boat. It is agreed that boats will be supplied at variable costs plus 20%.The variable cost and the sale price of the first boat to be produced has been estimated as:Rs.Materials8000Labour (1000 hrs @Rs. 4 /hr)Variable overheads (200% of Direct Labour)4000800020000Profit (20%)4000Sale Price24000Order will be for a minimum of 2 boats. You have been asked to ascertain the average selling price perboat if the order is for: 2 boats; 4 boats; and 8 boatsAlso ascertain the separate selling price for 2nd, 3rd and 4t* boats.No. of boats Cumulative averagetime per boat (hrs)1000Total time for all boats (hrs) Incremental time (hrs)11000(x2)(x4)800 (for 1 extra unit)1440 (for 2 extra units)900180048103240

Statement of Learning Curve-90% Cumulative production…

ABC produce a special type of boat to be used by Navy. A 90% learning curve is expected to apply to the production of this type of boat. It is agreed that boats will be supplied at variable costs plus 20%. The variable cost and the sale price of the first boat to be produced has been estimated as: Rs. Materials Labour (1000 hrs @Rs. 4 /hr) Variable overheads (200% of Direct Labour) 8000 4000 8000 20000 Profit (20%) Sale Price 4000 24000 Order will be for a minimum of 2 boats. You have been asked to ascertain the average selling price per boat if the order is for: 2 boats; 4 boats; and 8 boats Also ascertain the separate selling price for 2nd, 3rd and 4th boats.

ABC produce a special type of boat to be used by Navy. A 90% learning curve is expected to apply to the production of this type of boat. It is agreed that boats will be supplied at variable costs plus 20%. The variable cost and the sale price of the first boat to be produced has been estimated as: Rs. Materials Labour (1000 hrs @Rs. 4 /hr) Variable overheads (200% of Direct Labour) 8000 4000 8000 20000 Profit (20%) Sale Price 4000 24000 Order will be for a minimum of 2 boats. You have been asked to ascertain the average selling price per boat if the order is for: 2 boats; 4 boats; and 8 boats Also ascertain the separate selling price for 2nd, 3rd and 4th boats.

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

Section: Chapter Questions

Problem 8E: Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its...

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Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.
Assume that at the beginning of 20x2, Cicleta trained the 2 assembly workers in a new approach that had the objective of increasing the efficiency of the assembly process. Cicleta also began moving toward a JIT purchasing and manufacturing system. When JIT is fully implemented, the demand for expediting is expected to be virtually eliminated. It is expected to take two to three years for full implementation. Assume that receiving cost is a step-fixed cost with steps of 1,500 orders. The other three activities employ resources that are acquired as used and needed. At the end of 20x2, the following results were reported for the four activities: Required: 1. Prepare a trend report that shows the non-value-added costs for each activity for 20x1 and 20x2 and the change in costs for the two periods. Discuss the reports implications. 2. Explain the role of activity reduction for receiving and for expediting. What is the expected value of SQ for each activity after JIT is fully implemented? 3. What if at the end of 20x2, the selling price of a competing product is reduced by 27 per unit? Assume that the firm produces and sells 20,000 units of its product and that its product is associated only with the four activities being considered. By virtue of the waste-reduction savings, can the competitors price reduction be matched without reducing the unit profit margin of the product that prevailed at the beginning of the year? If not, how much more waste reduction is needed to achieve this outcome? In this case, what price decision would you recommend?
Assume the same information for the Pacific Boat Company as in Problem 10-40 with one exception. This exception is that Pacific Boat uses a 90% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours in its assembling operations. (A 90% learning curve means b = -0.152004.) Q. Prepare a prediction of the total costs for producing the six PT109s for the Navy.
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NUBD Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are P30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are P10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 16,000 units based on the cumulative average-time learning curve? A. 655.36 hours B. 256 hours C. 160 hours D. 409.6 hours
A company manufactures automobile pistons. It estimates that in the next year it will produce 4,70,000 piston rings using 94 per cent of its production capacity. 8 rings are produced per machine hour. Contribution (selling price, less variable costs) per ring is Rs 5. The management is considering an option to produce jigs and fixtures using the surplus capacity. Jigs and fixtures are used to hold the ring during machine operations. On quality considerations, it will either produce all the 25 units of jigs and fixtures that it requires annually inhouse, or it will continue to buy those from outside. It estimates that next year buying jigs and fixtures will cost Rs 1,62,500 (Rs 6,500 per unit). The estimated costs for producing the jigs and fixtures are material and labour cost per unit: Rs 4,000; and additional fixed costs: Rs 25,000 per year. Production of each unit will require 200 machine hours. Required: Advise the management on whether it should produce jigs and fixtures in…
NUBD Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are P30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are P10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 16,000 units based on the cumulative average-time learning curve? 655.36 hours 256 hours 160 hours 409.6 hours
Cycle Time and Conversion Cost per Unit Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are $12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit.$____________ per unit 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product).$_____________per unit Cycle Time and Velocity, MCE Computador has a manufacturing plant in Des Moines that has the theoretical capability to produce 243,000 laptops per quarter but currently produces 91,125 units. The conversion cost per quarter is $7,290,000. There are 60,750 production hours available within the…