EXTENDED ANALYSIS AND INTERPRETATION PROBLEM AIP 3.10 Pilot Plant The Bion Company has a Research and Development (R&D) building thot is shored by three wire and coble groups: High Voltage, Medium Voltage, and low Voltoge. Adjacent to the R&D building is a pilot plant, a small-scale production facility designed for limited runs of experimental and commercial products. The three groups rely on the pilot plant to produce samples of their formulations In the pilot plant, sample sizes vary from obout 1,000 kilograms to 10,000 kilograms. The R&D groups, including the pilot plant, are run as cost centers. The pilot plant also takes on special production runs for external customers that are too small for a regular plant. The pilot plant consists of three combination blending/extruding mochines, which produce pellets of compounded material. Unlike large commercial compounding machines, which can operate 24 hours/day, these machines are run for approximately 1,000 hours a year. In the past, the pilol plant has costed its jobs based on direct materials, variable machine time, and allocated overhead. Overhead is allocated by machine time. A single plant-wide machine rate is calculated pooling all three machines. The overhead pool includes plant fixed costs plus the obor cost of the department Approximately 20 percent of the machine technicians' time is spent performing general clean- e ond maintenance. Before each job, machine time is calculated by o computer progranm, hich outputs feed rate and setup parameters. Each product is scheduled to a specific machine on its formulation. The cost schedule of each machine is shown below. Capacity nts the historic annual average capacity. EXTENDED ANALYSIS AND INTERPRETATION PROBLEM AIP 3.10 Pilot Plant The Bion Company has a Research and Development (R&D) building thot is shored by three wire and coble groups: High Voltage, Medium Voltage, and low Voltoge. Adjacent to the R&D building is a pilot plant, a small-scale production facility designed for limited runs of experimental and commercial products. The three groups rely on the pilot plant to produce samples of their formulations In the pilot plant, sample sizes vary from obout 1,000 kilograms to 10,000 kilograms. The R&D groups, including the pilot plant, are run as cost centers. The pilot plant also takes on special production runs for external customers that are too small for a regular plant. The pilot plant consists of three combination blending/extruding mochines, which produce pellets of compounded material. Unlike large commercial compounding machines, which can operate 24 hours/day, these machines are run for approximately 1,000 hours a year. In the past, the pilol plant has costed its jobs based on direct materials, variable machine time, and allocated overhead. Overhead is allocated by machine time. A single plant-wide machine rate is calculated pooling all three machines. The overhead pool includes plant fixed costs plus the obor cost of the department Approximately 20 percent of the machine technicians' time is spent performing general clean- e ond maintenance. Before each job, machine time is calculated by o computer progranm, hich outputs feed rate and setup parameters. Each product is scheduled to a specific machine on its formulation. The cost schedule of each machine is shown below. Capacity nts the historic annual average capacity