18. Question Content Area

Aquamarine Company sells one of its products, Product X, for $50 each. Sales volume averages 5,000 units per year. Recently, its main competitor reduced the price of its product to $30. Aquamarine expects sales to drop dramatically unless it matches the price offered by its competitor. In addition, the current profit per unit must be maintained. Information about Product X (for production of 5,000 units) follows:

Standard QuantityActual QuantityActual CostMaterials (pounds)8,50010,00025,000Labor (hours)2,0002,50012,000Setups (hours)02,0004,000Material handling (moves)01,0002,500Warranties (number repaired)05008,000

The non-value-added cost per unit is (Round answer to two decimal places.):

a. $3.17.

b. $4.50.

c. $4.13.

d. $3.80.

24. Question Content Area

Phillips Screw Company produces screw fittings. It is determined that T = 1 inch in diameter. Specification limits allow a variation of plus or minus 0.5 inches. Products produced at values beyond the specification limits lose $15. A sample of five units produced showed the following values:

Unit NumberActual Diameter (Y)Unit 11.2Unit 21.3Unit 30.8Unit 40.9Unit 51.0

What is the average loss per unit?

a. $2.61

b. $12.00

c. $10.80

d. $2.16