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Consider the following simplified production process for an electronic device. Demand = 50,000 devices/Year Price = $50 each Raw Material = $5/device Employee Wage = $25/hr Number of Employees = 5 (1/workstation) Each Employee Works 2,080 hrs/year (40 hrs/week, 52 weeks/year) Other Expenses = $1,500,000/Year Color of the device: Green Workstation Processing Time 7 minutes 1 10 minutes 4 minutes 4 5 minutes 1 minute An Engineer proposes buying a new fixture to reduce total processing time by 4 minutes. The new fixture, which will cost $1,000, would allow some work to be transferred from workstation 100 to 200. Assume 2 minutes of work will be transferred from 1 to 2 and processing time of 1 will go down to 5 minutes, processing time of 4 will go down to 3 minutes and processing time of 2 will go up to 12 minutes. Would you approve this change? Explain Why? State your assumptions and show your math. 2. 3.

Consider the following simplified production process for an electronic device. Demand = 50,000 devices/Year Price = $50 each Raw Material = $5/device Employee Wage = $25/hr Number of Employees = 5 (1/workstation) Each Employee Works 2,080 hrs/year (40 hrs/week, 52 weeks/year) Other Expenses = $1,500,000/Year Color of the device: Green Workstation Processing Time 7 minutes 1 10 minutes 4 minutes 4 5 minutes 1 minute An Engineer proposes buying a new fixture to reduce total processing time by 4 minutes. The new fixture, which will cost $1,000, would allow some work to be transferred from workstation 100 to 200. Assume 2 minutes of work will be transferred from 1 to 2 and processing time of 1 will go down to 5 minutes, processing time of 4 will go down to 3 minutes and processing time of 2 will go up to 12 minutes. Would you approve this change? Explain Why? State your assumptions and show your math. 2. 3.

Cornerstones of Cost Management (Cornerstones Series)
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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Consider the following simplified production process for an electronic device. Demand = 50,000 devices/Year Price = $50 each Raw Material = $5/device Employee Wage = $25/hr Number of Employees = 5 (1/workstation) Each Employee Works 2,080 hrs/year (40 hrs/week, 52 weeks/year) Other Expenses = $1,500,000/Year Color of the device: Green Workstation Processing Time 7 minutes 1 10 minutes 3 4 minutes 5 minutes 1 minute An Engineer proposes buying a new fixture to reduce total processing time by 4 minutes. The new fixture, which will cost $1,000, would allow some work to be transferred from workstation 100 to 200. Assume 2 minutes of work will be transferred from 1 to 2 and processing time of 1 will go down to 5 minutes, processing time of 4 will go down to 3 minutes and processing time of 2 will go up to 12 minutes. Would you approve this change? Explain Why? State your assumptions and show your math.
Transcribed Image Text:Consider the following simplified production process for an electronic device. Demand = 50,000 devices/Year Price = $50 each Raw Material = $5/device Employee Wage = $25/hr Number of Employees = 5 (1/workstation) Each Employee Works 2,080 hrs/year (40 hrs/week, 52 weeks/year) Other Expenses = $1,500,000/Year Color of the device: Green Workstation Processing Time 7 minutes 1 10 minutes 3 4 minutes 5 minutes 1 minute An Engineer proposes buying a new fixture to reduce total processing time by 4 minutes. The new fixture, which will cost $1,000, would allow some work to be transferred from workstation 100 to 200. Assume 2 minutes of work will be transferred from 1 to 2 and processing time of 1 will go down to 5 minutes, processing time of 4 will go down to 3 minutes and processing time of 2 will go up to 12 minutes. Would you approve this change? Explain Why? State your assumptions and show your math.
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