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Appendix 1 I Frames I Foam Extruder CNC Leather Cutter I Install Motor [if needed) I CNC Foam Slicer ' Ready for Cushion Foam Pieces

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Appendix 1 I Frames I Foam Extruder CNC Leather Cutter I Install Motor [if needed) I CNC Foam Slicer ' Ready for Cushion Foam Pieces Ready for Sewing Sew Leather Pieces Ready for Frame Complete Chair 4 Wallace Recliner Wallace Recliner (WC) manufactures a line of upholstered recliners. The line includes a single, a loveseat, and a couch. Appendix 1 shows the production process. Two groups of indirect labour, general factory labour and tailors, build the recliners. General factory labour does all the manufacturing work except the final assembly of the recliner cushions, which is done by the tailors. WC treats all labour as manufacturing overhead. General factory labour is paid a salary and benefits totalling $58,000 per year. General factory labour is expected to work 49 weeks a year, 5 days a week, and 8 hours per day. General factory labour is allowed two fifteen-minute breaks and one 30-minute lunch break each day. WC pays tailors salary and benefits totalling $65,000 per year. Tailors are expected to work 48 weeks a year, 5 days a week, and 8 hours per day. Tailors are allowed two 15- minute breaks and one 30-minute lunch break each day. Nominal Variable Machine Annual Fixed Capacity The cushions are the major component of the Cost Capacity Operating Cost Hourly Rate (hours (per hour) recliners. Cushion manufacturing begins by adding Foam Extruder $210,000 1,960 $900 $107.14 Foam Slicer $150,000 1,960 $280 $76.53 chemicals to an extruder which produces blocks of Leather Cutter $180,00 1,920 $310 $93.75 General Factory Labour $58,000 1,960 $29.59 foam. The blocks then enter a CNC slicer which Tailors $65,000 1,920 $33.85 renders the blocks into the foam pieces required Hours Taken per 50 units for the cushions. General factory labour collects Single Love Seat Couch Foam Extruder 0.30 0.50 0.90 and organizes the pieces exiting the foam slicer. Foam Slicer 1.10 1.90 3.10 Leather Cutter 1.90 2.50 4.80 General Factory Labour A parallel operation prepares the leather that will Foam Extruder 1.50 2.90 6.20 be used to encase the foam pieces and make the - Foam Slicer 5.60 8.60 9.70 - Leather Cutter 0.50 1.20 1.90 recliner cushions. Large pieces of leather hides are Tailor 20 38 51 fed into a CNC machine that is programmed to cut Factory Variable Overhead (per labor hour) $22.00 the hide, in a way that minimizes waste, into the - General Labour - Tailor labor $24.00 pieces required to make the cushions. Tailors begin the final cushion manufacturing process by sewing leather pieces into partially assembled cushions. Then the tailors insert the foam pieces into the partially assembled cushions and complete the sewing to produce the cushions. The cushions are then fastened to the frames which completes the manufacturing process. Variable factory overhead is $22 per general factory labour hour and $24 per tailor labour hour. The above exhibit provides a cost summary of the factory equipment. Required Compute the total manufacturing cost for the 50 unit batches of the single, love seat, and couch recliners

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