A batch of 50 good workpieces is to be produced by machining

A batch of 50 good workpieces is to be produced by machining using a starting material that costs SR20 a piece. The time of the machining process is 7 minutes, while the handling time is 1 minute only. The cutting tools used in the process cost SR 5, and each tool can machine 5 workpieces before it needs to be replaced by another tool. Changing of the cutting tool will take 30 seconds and setting up the machine will consume 30 minutes. If the machine is available 100% of the time and it produces 2% scraap rate, then determine: a) The production rate b)The cost of each produce part given that the hourly wage rate of the operator = SR50/hr, and the applicable labor overhead rate = 50%, and hourly equipment cost rate = SR90/hr; which includes overhead.

Solution

No: of work pieces - 50
Machining time - 7 minutes
Handling time-1 minute
Cutting tool cost: 5 SR
Each tool can machine 5 work piece
therefore no. of tool required for 50 workpiece is 10
Total cost of cutting tool cost-5*10 = 50 SR
Cutting tool change total-30 secs *10 =300 secs =5 minutes totally
Total time req. for 50 work piece - 50*(7+1)+5 minutes - 405 minutes for 50 pieces
(a) Production rate - 7.407 workpieces/hour - Ans (a)
(b) Total cost to product 50 parts - Cutting tool cost+labor+equipment cost
Cutting tool cost - 50 SR
Equipment cost - 90/hr - 607.5 SR totally for 405 minutes
Labor cost - 337.5 SR for 405 minutes
Overhead labor cost - 337.5/2 - 168.75 SR
Total cost - 50 + 607.5 + 337.5 + 168.75 = 1163.75 SR- Ans (b)