Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following data refer to two different processes that are being considered for the manufacture of a new design of Tonka Mighty Dump Truck

The following data refer to two different processes that are being considered for the manufacture of a new

The following data refer to two different processes that are being considered for the manufacture of a new design of "Tonka Mighty Dump Truck" (a popular children's toy) in a factory to be located in a new industrial park in El Paso, TX. METHOD A Initial cost of equipment and assembly of equipment = $480,000 Labor time for assembly of one toy: 8 minutes Labor cost: $12.00 per hour Material and tooling cost: $5.25 per toy METHOD B Initial cost of equipment and assembly of equipment = $750,000 Labor time for assembly of one toy: 4 minutes Labor cost: $12.00 per hour Material and tooling cost: $5.25 per toy FOR EITHER METHOD A OR METHOD B * 15 production hours per day for 300 days per year * Interest rate on loan from a commercial bank to buy the equipment and pay for its assembly in the factory: 9% per year * Period of analysis: 5 years By calculating the TOTAL cost of manufacture PER TOY using the two methods. comment on their relative economics.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

SOLUTION Based on the information provided we can calculate the total cost of manufacture per toy using Method A and Method B Method A Initial investment 480000 Labor cost per toy 525 Total cost per t... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton

7th Edition

978-1760421144, 1760421146

More Books

Students also viewed these Accounting questions