Question
A manufacturing firm produces widgets, and they must process millions of widgets each year. When the customer places an order, materials such as metal pieces
A manufacturing firm produces widgets, and they must process millions of widgets each year. When the customer places an order, materials such as metal pieces and electronic components are gathered and checked against the order specifications. Then, various quality checks are conducted to ensure that the widgets meet the necessary standards. Some orders are more complicated than others, so the expected time allowed to process an order is geared towards an "average" order.
Some work-measurement experts have been closely monitoring the manufacturing process at a particular branch. They are seeking ways to improve productivity. Suppose the firm received orders for 8 million widgets on a particular day. On the third day, the work-measurement teams discovered that all the necessary materials (metal pieces, electronic components, etc.) had been gathered for each order, but 20% of the widgets still needed to undergo a final quality inspection. The other widgets were fully completed.
1. Suppose the final inspection represents 5% of the overall processing time in this process. Compute
the total work done in terms of equivalent units.
2. The materials and supplies consumed were $400,000. For these calculations, materials and
supplies are regarded just like direct materials. The conversion costs were $4,910,400. Compute
the unit costs of materials and supplies and of conversion.
3. Compute the cost of the widgets not yet fully processed
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