Two processes are put in place for production. Neither will be removed. Process

Question

Two processes are put in place for production. Neither will be removed. Process R is designed to produce 10,000 units per year and has a fixed cost of $90,000 per year. Process T has the same design capacity and has a fixed cost of $80,000 per year. Process R produces the initial 4,000 units at a variable cost of $8 per unit and the next 6,000 units at a variable cost of $17 per unit. Process T produces the first 5,000 units at a variable cost of $9 each and produces the next 5,000 at $5 each. Assume that the fixed costs are incurred even if no production is assigned to the process. Click here to access the TVM Factor Table Calculator Your answer is correct. Part a) What should be the loads assigned to Processes R and T if demand for the product is 5,500 units? 4000 units Process R load Process T load carry all interim calculations to 5 decimal places and then round your final answer to the nearest unit. The tolerance is t3%. 1500 units Your answer is incorrect. Try again. Part b) What is the total cost and average cost per unit for Part a? 45500 Total Cost: 8.27 Average Cost per Unit Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is396.

Explanation / Answer

Part a: Process R 4000 units Process T 1500 units Part b: Total Cost Variable cost + fixed cost 32000++13500+90000+80000=215500 Average Cost per unit 215500/5500 = 39.18 per unit Part c: Process R 0 Process T 9500 units Part d: Total Cost Variable cost + fixed cost 45000+22500+90000+80000=237500 Average Cost per unit 237500/9500 = 25 per unit

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