Name Last Name Class Grade Quiz 1 The cost and production d

Name Last Name Class Grade Quiz # 1. The cost and production data in 2006 for a manufacturing provided in the table below. company in Los Angeles is Material and Parts Cost $1,500,000 $2,000,000 Labor Costs Overhead Cost Annual Production Quantity $2,500,000 500,000 units 2. The selling price is fixed adding a 40% mark-up on the production cost. The selling price/unit is A. $16.80 B. $9.80 C. $12.00 D. $14.20 3. Pace Automation Corporation in Glendale, CA must choose the better economical alternative between the two listed below. If 1,000 units are required per year, which altenative is economically attractive? Assume that the life of the automated equipment is 5 years. (8) Alternative Resources Required Skilled Operator at $25 per hour; 35 minutes per unit of skilled labor time is uired Unskilled operator at $12 per hour plus automated equipment costing $50,000; 10 minutes of operator time per unit is required 4. A used car company in town would like to maximize the profits on cars sold per week. This is the historical data available on profits made in the past two years. Type Car Price Profit made Car sold per week I Under $5K $300 $250 II Between $5K and $7.5K Between $7.5K and IV Between $10K and $12.5.5K V Over $12.5K $350 $400 In a given week, determine the profit made. (8)

Solution

2. Option A

Material and parts cost 15,00,000

Labor Costs 2000000

Overhead Costs 2500000

Annual Production Quantity 500000

Production cost 60,00,000

Total Production cost with 40 percent markup 8400000

Price per unit 16.8 = 8400000/500000

3.

Alt B is preferred
Alt A: Per unit cost = (25*35)/60 = $14.58 and hence for 1000 units for 5 years = $72900
Alt B: Per unit cost labor cost = (10*12)/60 = $2 and hence for 1000 units for 5 years = 2*1000*5 = $10000. The total cost is 10000+50000 = $60000

4. Profit = 300+200+350+400=$1250