Question

6. Ashmore Company has two production departments, Cutting and Finishing. The Cutting Department is constrained by the speed of the cutting machines. The Finishing Department is constrained by the speed of the workers. The Fin- ishing Department normally waits on work coming from the Cutting Depart- ment. Each department works an 8- hour day. If the Cutting Department were to begin work 2 hours earlier than the Finishing Department each day (thereby working a 10-hour day), the two departments would finish their work at about the same time. Not only would this change eliminate the bottleneck, but also it would increase production by 40 finished units per day. The number of units in finished goods inventory would remain the same. It costs $400 to oper- ate the Cutting Department 2 more hours per day. The contribution margin is $15 per unit. If the Cutting Depart- ment operates 10 hours per day, the total production per day is: a. 160 units. b. 200 units. c. 220 units. d. 400 units. 7. Using the data in question 6, and assum- ing the Cutting Department operates 10 hours per day, the total contribution margin per day: a. increases by $200. b. remains the same. c: decreases by $200. 1 d. decreases by $400.

Answer 1

Question-6's Answer's b. 200 units Explanation : 1. The increase of a hours per day in the cutting department increases thie.companies production of; finished goods by 40 units per day. Thus, the companies production of finished goods per hour of Gutting Department times is 20 units (40/2), and the company's total production of finished goods per day is 200 units lie 20110). Question-] Answer a increase by $200 Explanation's Change in total =(40x815) - $400 contribution perday $600-400 = $200 increase.

Question-13 Answer's a. $1,950 Explanation's Equipment Maintenance Product Testing . $1,150 $ 786 $1,940 .) Equipment maintenance is a prevention cost, ii) product. Testing is an appraisal cost, iii) Rework is an internal failure cost, and izy product repair is an external failure cost, assumine the repair takes place after the product is shipped to customers.

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