Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please answer asap! thank you! :) [The following information applies to the questions displayed below] Ellington Company manufactures a line of motorbikes and dirt bikes
please answer asap! thank you! :)
[The following information applies to the questions displayed below] Ellington Company manufactures a line of motorbikes and dirt bikes under the trade name Crosscountry. The company has been in business for almost 20 years and has maintained a profitable share of the recreational vehicle market due to its reputation for high-quality products. In addition, Ellington's engineering department has kept the company in the forefront by incorporating the latest technology in the CrossCountry bikes. Most subassembly work for the bikes is subcontracted to reliable vendors. However, the final assembly and inspection of all products is performed at Ellington's plant. Eitington recently developed a new braking system for the CrossCountry Model-500 dirt bike. Because of the company's current avallability of production capacity, Jim Walsh, production manager, recommended that the first lot of the new braking system be manufactured in house rather than by subcontractors: This 210 unit production run has now been completed. The cumulative average labor hours per unit for the braking system was 210 hours. Ellington's expenence with similar products indicates that a learning curve of 80% is applicable and that the learning factor can be expected to extend only through the fourth production run (210 per batch) for a total of 840 units Eilington's direct labor cost is $32 per direct labor hour. Its management must decide whether to continue producing the braking system in its own plant or to subcontract this work, Joyce Lane, Ellington's purchasing agent, has received a proposat from MACQ. a company specializing in component assembly. MACQ has done work in the past for Eitington and has proved to be a high-quality and reliable vendor. The terms of MACQ's proposal are negotabie, and before beginning discussions with them, Joyce has decided to conduct some relevant financial analysis Required: 1. Ellington Company has an immediate requirement for a total of 1,500 units of the braking system. Determine the company's future direct labor costs to produce the required braking system units if it manufactures the units in -house 2 A consultant has advised Joyce that the learning rate for this application might be closer to 75%. What is the effect on projected costs of using a 75% learning rate as opposed to an 80% learning rate? (Do not round intermediate calculotions.) [The following information applies to the questions displayed below] Ellington Company manufactures a line of motorbikes and dirt bikes under the trade name Crosscountry. The company has been in business for almost 20 years and has maintained a profitable share of the recreational vehicle market due to its reputation for high-quality products. In addition, Ellington's engineering department has kept the company in the forefront by incorporating the latest technology in the CrossCountry bikes. Most subassembly work for the bikes is subcontracted to reliable vendors. However, the final assembly and inspection of all products is performed at Ellington's plant. Eitington recently developed a new braking system for the CrossCountry Model-500 dirt bike. Because of the company's current avallability of production capacity, Jim Walsh, production manager, recommended that the first lot of the new braking system be manufactured in house rather than by subcontractors: This 210 unit production run has now been completed. The cumulative average labor hours per unit for the braking system was 210 hours. Ellington's expenence with similar products indicates that a learning curve of 80% is applicable and that the learning factor can be expected to extend only through the fourth production run (210 per batch) for a total of 840 units Eilington's direct labor cost is $32 per direct labor hour. Its management must decide whether to continue producing the braking system in its own plant or to subcontract this work, Joyce Lane, Ellington's purchasing agent, has received a proposat from MACQ. a company specializing in component assembly. MACQ has done work in the past for Eitington and has proved to be a high-quality and reliable vendor. The terms of MACQ's proposal are negotabie, and before beginning discussions with them, Joyce has decided to conduct some relevant financial analysis Required: 1. Ellington Company has an immediate requirement for a total of 1,500 units of the braking system. Determine the company's future direct labor costs to produce the required braking system units if it manufactures the units in -house 2 A consultant has advised Joyce that the learning rate for this application might be closer to 75%. What is the effect on projected costs of using a 75% learning rate as opposed to an 80% learning rate? (Do not round intermediate calculotions.) 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