The starting work part costs part costs 225 in a batch produ

The starting work part costs part costs $2.25 in a batch production operation. Batch quantity = 100 parts. Each cycle, part handling time = 0.50 min, and operation time = 1.67 min. Setup time = 50 min Equipment cost rate = $35.00/hr, and labor cost rate = $18.00/hr, including overhead costs. There is no tool change or tool cost in the operation. The machine tool is 100% reliable, and scrap rate = 5%. Determine production rate, finished part cost, and number of hours required to complete the batch.

Solution

a>
Scrap rate is 5%
Starting Quantity of parts,Q=100/0.95=105.3(approx 106 parts)

T1=Part handling time + operation time
= 0.5 + 1.67 = 2.17 min/part
Determining batch time, including set up time

T2= 50 + 106(2.17) =280.2 min/batch =4.67 hr

Average production rate of parts, Rp =100/4.67 = 21.43 parts/hr
Average production rate of acceptable parts, Rp= 21.43(1-0.05) = 20.36 parts/hr

b>
determining part cost,
batch cost, Cb = 106(2.25) + (18+35)4.67 = $486.01/batch

Cpc =part cost = 486.01/100 = $4.86/parts

Average calculation of Cpc:
Cpc =Average initial cost + average set up time cost + average part handling and operation time cost
Cpc = 2.25/0.95 + ((18+35)/60)(50/100) + ((18+35)/60)(2.17/0.95) =$4.83/part

c>
time to complete the batch is (T2 =4.67 hr)