i need help.Thanks manufacturing costing system with one categories: Target cost
ID: 2339779 • Letter: I
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i need help.Thanks
manufacturing costing system with one categories: Target costs, effect of product-design changes on product costs. Neuro Instruments uses a direct-cost category (direct materials) and three indirect-cost a. Setup, production-order, and materials-handling costs that vary with the number of batches b. Manufacturing-operations costs that vary with machine-hours c. Costs of engineering changes that vary with the number of engineering changes made In response to competitive pressures at the end of 2016, Neuro Instruments used value-engineering tech- niques to reduce manufacturing costs. Actual information for 2016 and 2017 is as follows: 2016 2017 Setup, production-order, and materials-handling costs per batch $ 8,900 S8,000 S 64 S 48 Total manufacturing-operations cost per machine-hour Cost per engineering change $16,000 $8,000 The management of Neuro Instruments wants to evaluate whether value engineering has succeeded in reducing the target manufacturing cost per unit of one of its products, HJ6, by 5%. Actual results for 2016 and 2017 for HJ6 are: Actual Results for 2017 4,600 $ 1,300 Actual Results for 2016 Units of HJ6 produced Direct material cost per unit of HJ6 Total number of batches required to produce HJ6 Total machine-hours required to produce HJ6 Number of engineering changes made S1,400 60 20,000 24 70 30,000 red 1. Calculate the manufacturing cost per unit of HJ6 in 2016. 2. Calculate the manufacturing cost per unit of HJ6 in 2017. 3. Did Neuro Instruments achieve the target manufacturing cost per unit for HJ6 in 2017? Explain. 4. Explain how Neuro Instruments reduced the manufacturing cost per unit of HJ6 in 2017 5. What challenges might managers at Neuro Instruments encounter in achieving the target cost? How ht thou orercome these challenges?Explanation / Answer
Year 2016 2107 Units of HJ6 produced 2700 4600 Direct materials cost per unit 1400 1300 Setup, production-order, and material handling costs per batch 8900 8000 Number of batches 60 70 Total costs of Setup, production-order, and material handling costs per batch 534000 560000 Manufacturing operation cost per hour 64 48 Total machine hours required 20000 30000 Total manufacturing operation costs 1280000 1440000 Cost per engineering change 16000 8000 Number of engineering changes made 24 7 Total Engineering change costs 384000 56000 Total Indirect costs 2198000 2056000 Divide by Number of units of HJ6 produced 2700 4600 Indirect cost per unit 814 447 Requirement 1 & 2 Manufacturing cost per unit 2214 1747 Reduction of target manufacturing cost by % =(2214-1747)/1747% = 26.73 % Requirement 3 Yes, Neuro Instruments achieved the target manufacturing cost per unit of HJ6 in 2017. In fact it has achieved great deal of success. Requirement 4 We can see from the above table, that Neuro Instruments has worked in almost all the department to bring abour the efficiency. Be it per unit of direct materials required to every category of indirect cost per unit. It is fantastic. Great deal of work on the part of company. As per the Chegg Policy, we are supposed to answer maximum of 4 four sub-parts of a question. Thank You
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