Baby Care makes “Binkies,” a specialty line of pacifiers using one large machine that both makes and packages the pacifier. The machine’s managed capacity cost is $250,000 per year to run one shift of 2,000 hours. Its committed costs are $150,000 per year.

REQUIRED:

a. Calculate the managed cost per hour.

b. Calculate the committed cost per hour.

c. It takes four seconds to make one Binkie (its cycle time). Using competitive cost, what does it cost to make one Binkie?