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The Assembly Company is experiencing a bottleneck in its plant. Setup time at one of the workstations has been identified as the bottleneck. The production
The Assembly Company is experiencing a bottleneck in its plant. Setup time at one of the workstations has been identified as the bottleneck. The production manager has proposed a plan to reduce setup time at a cost of $36,000. The change will result in the production of 8,000 additional units. The selling price per unit is $12, the cost of direct materials is $5 per unit, and direct labor costs are $3 per unit. Assume all units produced can be sold. a. Calculate the net benefit/cost of implementing the proposal to reduce set-up time. b. Should Assembly Company go forward with the implementation program? Why/why not
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