A manufacturing company produces 20,000 units per month, 80% of which are free of defects. The...
A manufacturing company produces 20,000 units per month, 80% of which are free of defects. The Percentage of defective units that can be reworked is 45%. The direct manufacturing cost for each unit is $9.85. It costs $4.10 to rework a defective unit. What is the average manufacturing cost per unit? Less than or equal to $11.00 $11.01 – $11.30 $11.31 – $11.50 $11.51 – $11.60 More than $11.60
Homework Answers
Ans Good unit = 80% * 20000 = 16000 units
Defective unit = 20% * 20000 = 4000 units
Rework unit = 45 % * 4000 = 1800 units
Y = [(I)(%G)] + [(I)(1-%G)(%R)]
Y= Yield
I= Number units started in production
% G= % good units
% R= % of defective units reworked
The monthly yield
y = [(20000units)(80%)+(20000 units)(1-80%)(45%)]
y = 17,800 units/month
product cost = [(direct manufacturing cost per unit)(input)]+
[(rework cost per unit)(reworked unit)] /yield
product cost = [($9.85)(20000 units) ] + [ ($4.10)( 1800 units) ] / 17800 units
Product cost = $11.48
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