1 A production system has a burden rate of 200 per hours and

1) A production system has a burden rate of $200 per hours and a set up time of 4.4 hours. What is the setup cost per part for lot size of 200 parts?

2) True Bore Machine Company has annual sales of $120 million an average annual inventory valued at $5 million. With COGS of $0.85 per sales dollar, what is the inventory value for the company? What average inventory turn value would produce a turn ratio of 300?

Solution

1. the total cost is= 4.4*$200= $933

the total lot size is 200, and each one costing of 933/200= $4.665

2. inventory value for the company is= 0.85* $5,000,000= $4.25 millions