Question
Fiberform Industries produces a line of motorboats. The assembly department programs computerized equipment to shape and bend the metal railings for each boat. This equipment
Fiberform Industries produces a line of motorboats. The assembly department programs computerized equipment to shape and bend the metal railings for each boat. This equipment is capable of producing 40 railings per hour. The department typically produces only 30 railings per hour. The plant operates two (8-hour) shifts, 6 days a week. The shape and bend of the railings are critical, and the firm currently discards 9,600 completed railings a year because of poor shape and bend. The plant is closed for 12 vacation days and 10 holidays per year. The equipment is also shut down for one day every 2 months for regular maintenance. The assembly departments average production of good railings for the past 5 years is 130,000 a year. The department expected to produce 120,000 good boat railings this year. However, the actual production was 105,000 railings. For this problem, assume the 365th day is a Sunday. Further assume any difference between actual sales and production under current conditions is idle marketable capacity. Required:
1. Assume that the total equipment-related cost for the assembly department was $2,400,000. Determine the volume and capacity cost for each of the following traditional measures: (i) theoretical; (ii) normal; (iii) budget; and (iv) actual.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started