Graham Company wants to reduce activity costs by $0.30 per unit. The setup activity for a...
Graham Company wants to reduce activity costs by $0.30 per unit. The setup activity for a batch of 100 units of Part RR110 currently costs $80 per setup. A process engineer proposes reengineering the setup activity so that it takes 60% of the original cost per setup. By how much will this reduce activity costs per unit? Will more cost savings need to be found?
a.$0.53; no
b.$0.32; no
c.$0.48; no
d.$0.22; yes
Homework Answers
Setup cost per unit = 80/100
= 0.80
When re-engineered, this 0.80 will reduce by 60%
= 0.80 - (0.80*60%)
= 0.32
Option B
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Graham Company wants to reduce activity costs by $0.30 per unit.
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