12) A manufacturing firm utilizes a manual machine to make aproduct. Theproduction rate is...

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Accounting

12) A manufacturing firm utilizes a manual machine to make aproduct. Theproduction rate is 125 parts/hr. This current methoduses three operators at a labor wagerate of $18/hr. The manualmachine’s capital operation cost (including cost of electricity)is$34/hr. The firm is considering replacing the manual machine with aprogrammableautomation work cell. The new cell only requires oneoperator, but it has a capital cost(including cost of electricity)of $95/hr. The production rate of the machine is 225parts/hr.Perform a combined productivity analysis to determine ifthe firm should purchase theautomated work cell.
13) Referring to the manual manufacturing method informationgiven in reviewquestion 12, calculate the total annual cost toproduce 100,000 parts per year. Note that theannual cost ofmaintenance for the machine is $16,000. Additionally, the rawmaterial costis $2.50 per part
14) A new automated method is being developed to replace themanual methoddescribed in review questions 12 and 13. The newmethod has a production rate of 245parts/hr, requires only oneoperator, and has a capital cost of $65.50/hour. Additionally,thenew method decreases material waste, thereby reducing raw materialcosts to $1.00/ part. Because of machine sophistication, yearlymaintenance costs will increase to $26,000 per year. Perform aproductivity analysis to compare the two alternatives if annualproduction is 100,000 parts/yr. Is the proposed method moreproductive?Calculate the quantity breakeven point. What is totalannual cost savings if the proposed method is used?

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Ans12 Productivity analysis to determine if the firm should go for automated cell or not Cost analysis under Manual machine Units of production 125partshr Labour wage for 3 labours 318hr 54hr Capital operation cost 34hr Total cost of production under manual machine labour wage capital operation cost 54hr 34hr See Answer

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In: Accounting12) A manufacturing firm utilizes a manual machine to make aproduct. Theproduction rate is 125...12) A manufacturing firm utilizes a manual machine to make aproduct. Theproduction rate is 125 parts/hr. This current methoduses three operators at a labor wagerate of $18/hr. The manualmachine’s capital operation cost (including cost of electricity)is$34/hr. The firm is considering replacing the manual machine with aprogrammableautomation work cell. The new cell only requires oneoperator, but it has a capital cost(including cost of electricity)of $95/hr. The production rate of the machine is 225parts/hr.Perform a combined productivity analysis to determine ifthe firm should purchase theautomated work cell.13) Referring to the manual manufacturing method informationgiven in reviewquestion 12, calculate the total annual cost toproduce 100,000 parts per year. Note that theannual cost ofmaintenance for the machine is $16,000. Additionally, the rawmaterial costis $2.50 per part14) A new automated method is being developed to replace themanual methoddescribed in review questions 12 and 13. The newmethod has a production rate of 245parts/hr, requires only oneoperator, and has a capital cost of $65.50/hour. Additionally,thenew method decreases material waste, thereby reducing raw materialcosts to $1.00/ part. Because of machine sophistication, yearlymaintenance costs will increase to $26,000 per year. Perform aproductivity analysis to compare the two alternatives if annualproduction is 100,000 parts/yr. Is the proposed method moreproductive?Calculate the quantity breakeven point. What is totalannual cost savings if the proposed method is used?