Question
Ashley Technology Inc. manufactures a scrambling device for cellular telephones. The devices main component is a delicate part, CT140. CT140 is easily damaged and requires
Ashley Technology Inc. manufactures a scrambling device for cellular telephones. The devices main component is a delicate part, CT140. CT140 is easily damaged and requires careful handling. Once damaged, it must be discarded. The firm hires only skilled laborers to manufacture and install CT140; however, some are still damaged. Robotic instruments process all other parts. Ashleys operating data for 2 years are as follows:
2019 | 2018 | ||||||
Units manufactured | 750,000 | 1,000,000 | |||||
Number of CT140 used | 900,000 | 1,050,000 | |||||
Number of direct labor hours spent | 150,000 | 200,000 | |||||
Cost of CT140 per unit | $ | 156 | $ | 135 | |||
Direct labor wage rate per hour | $ | 56 | $ | 62 | |||
Assume that fixed manufacturing costs are $50 million in both 2018 and 2019.
Required:
1. Compute the total productivity ratios for 2018 and 2019
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