Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers as follows: Activity Expected Cost Activity Driver Activity Capacity Engineering $1,000,000 Engineering hours 5,000 hours Setups 900,000 Setups 200 setups Machining 2,000,000 Machine hours 25,000 machine hours Inspection 800,000 Inspection hours 2,500 inspection hours Quasi-Tech produces two models: Model C and Model D. The following table shows how the two products consume activity: Model C Model D Units completed 300,000 200,000 Engineering hours 1,000 4,000 Setups 80 120 Machine hours 20,000 5,000 Inspection hours 1,500 1,000 Determine the engineering costs assigned to Model C using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. The engineering cost assigned to Model C would be
Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers as follows: Activity Expected Cost Activity Driver Activity Capacity Engineering $1,000,000 Engineering hours 5,000 hours Setups 900,000 Setups 200 setups Machining 2,000,000 Machine hours 25,000 machine hours Inspection 800,000 Inspection hours 2,500 inspection hours Quasi-Tech produces two models: Model C and Model D. The following table shows how the two products consume activity: Model C Model D Units completed 300,000 200,000 Engineering hours 1,000 4,000 Setups 80 120 Machine hours 20,000 5,000 Inspection hours 1,500 1,000 Determine the engineering costs assigned to Model C using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. The engineering cost assigned to Model C would be
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter4: Linear Programming Models
Section4.8: Data Envelopment Analysis (dea)
Problem 41P
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Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers as follows:
Quasi-Tech produces two models: Model C and Model D. The following table shows how the two products consume activity:
Determine the engineering costs assigned to Model C using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. The engineering cost assigned to Model C would be
| Activity | Expected Cost | Activity Driver | Activity Capacity |
| Engineering | $1,000,000 | Engineering hours | 5,000 hours |
| Setups | 900,000 | Setups | 200 setups |
| Machining | 2,000,000 | Machine hours | 25,000 machine hours |
| Inspection | 800,000 | Inspection hours | 2,500 inspection hours |
Quasi-Tech produces two models: Model C and Model D. The following table shows how the two products consume activity:
| Model C | Model D | |
| Units completed | 300,000 | 200,000 |
| Engineering hours | 1,000 | 4,000 |
| Setups | 80 | 120 |
| Machine hours | 20,000 | 5,000 |
| Inspection hours | 1,500 | 1,000 |
Determine the engineering costs assigned to Model C using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. The engineering cost assigned to Model C would be
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