Roedel Electronics provides tablet computer accessories, including integrated ke

Question

Roedel Electronics provides tablet computer accessories, including integrated keyboard tablet stands
that connect a keyboard to a tablet device and holds the device at a preferred angle for easy viewing
and typing. Roedel produces two sizes of integrated keyboard tablet stands, a small and a large size.
Each size uses the same keyboard attachment, but the stand consists of two different pieces,a top flap
and a vertical stand that differ by size.
Roedel’s sales forecast indicates that 7000 small integrated keyboard tablet stands and 5000 large
integrated keyboard tablet stands will be needed to satisfy demand during the upcoming Christmas
season. Because only 500 hours of in-house manufacturing time are available. Roedel is considering
purchasing some, or all, of the subassemblies from outside suppliers. If Roedel manufactures a
subassembly in-house, it incurs a fixed setup cost as well as a variable manufacturing cost.
The following table shows the setup cost, the manufacturing time per subassembly, the manufacturing
cost per subassembly, and the cost to purchase each of the subassemblies from an outside supplier.
setup manufacturing manufacturing purchase cost
subassembly cost ($) time/unit (in mins) cost per unit ($) per unit ($)
Keyboard 1,000 0.9 0.40 0.65
Small top flap 1,200 2.2 2.90 3.45
Large top flap 1,900 3.0 3.15 3.70
Small vertical stand 1,500 0.8 0.30 0.50
Large vertical stand 1,500 1.0 0.55 0.70
a. Determine how many units of each subassembly Roedel should manufacture and how many
units of each subassembly Roedel should purchase. What is the total manufacturing and
purchase cost associated with your recommendation?
b. Suppose Roedel is considering purchasing new machinery to produce large top flaps. For the
new machinery, the setup cost is $3,000; the manufacturing time is 2.5 minutes per unit, and
the manufacturing cost is $2.60 per unit. Assuming the new machinery is purchased, determine
how many units of each subassembly Roedel should manufacture and how many units of eac
subassembly Roedel should purchase. What is the total manufacturing and purchase cost
associated with your recommendation?
Do you think the new machinery should be purchased? Explain

Explanation / Answer

Small Large 500 Hours 7000 5000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Sub Assembly Set Up costs Time per Unit Unit Manfacturing cost Unit Purchase Cost Savings Per unit if Manufactured in House (5)-(4) Hours Required to Produce Demanded Units* Hours Required to Produce Per Unit(3)/60 Rate of Savings Per Hour=(6)*No of Units Produced per hour Hours Utilised (500 Hour Limit) Units Produced in House Units Sub Assembled Outside Cost of Production Cost of Outsourcing Total Costs Keyboard 1000 0.9 0.4 0.65 0.25 180 0.015 16.66666667 180 12000 4800 0 5800 Small top Flap 1200 2.2 2.9 3.45 0.55 256.6666667 0.036666667 15 256.6666667 7000 20300 0 21500 Large top Flap 1900 3 3.15 3.7 0.55 250 0.05 11 5000 0 18500 20400 Small Vertical Stand 1500 0.8 0.3 0.5 0.2 93.33333333 0.013333333 15 63.33333333 4571 2429 1371.3 1214.5 4085.8 Large Vertical Stand 1500 1 0.55 0.7 0.15 83.33333333 0.016666667 9 5000 0 3500 5000 TOTAL 500 56785.8 * Small=Time per Unit*7000/60 Large=Time per Units*5000/60 Keyboards=Time Peruni*12000/60 No Of Units Produced Per Hour Hours Per Unit No of Units Produced in An Hour(1/Hours per Unit) Keyboards 0.015 66.66666667 1 0.015 Small top Flap 0.036666667 27.27272727 1 Large top Flap 0.05 20 66.66666667 Small Vertical Stand 0.013333333 75 Large Vertical Stand 0.016666667 60 If new Machinery is Purchased 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Sub Assembly Set Up costs Time per Unit Unit Manfacturing cost Unit Purchase Cost Savings Per unit if Manufactured in House (5)-(4) Hours Required to Produce Demanded Units* Hours Required to Produce Per Unit(3)/60 Rate of Savings Per Hour=(6)*No of Units Produced per hour Hours Utilised (500 Hour Limit) Units Produced in House Units Sub Assembled Outside Cost of Production Cost of Outsourcing Total Costs Keyboard 1000 0.9 0.4 0.65 0.25 180 0.015 0 180 12000 4800 0 5800 Small top Flap 1200 2.2 2.9 3.45 0.55 256.6666667 0.036666667 0 256.6666667 7000 20300 0 21500 Small Vertical Stand 1500 0.8 0.3 0.5 0.2 93.33333333 0.013333333 0 63.33333333 4571 2429 1371.3 1214.5 4085.8 Large Vertical Stand 1500 1 0.55 0.7 0.15 83.33333333 0.016666667 0 5000 0 3500 5000 Large Top Flaps 3000 2.5 2.6 3.7 1.1 5000 13000 16000 Total 500 52385.8

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