Question

the new phone. His du 0.35 hour per unit. A Determine the Assembly activity cost using the S-3 labor classificati Is the product engineer's proposal supported? ADM-3 Production run size and activity improvement Littlejohn, Inc. manufactures machined parts for the automotive industry. The activity associated with Part XX-10 is as follows: Activity Rate = Activity Fabrication Setup Production control Moving Total activity cost per unit Estimated units of production Activity cost per unit Activity Bose Usage 250 dlh 10 setups 10 prod.runs 10 moves $80 per dih $80 per setup $30 per prod. run $25 per move Activity Cost $20,000 800 300 250 $21,350 500 $ 42.70

Answer 1

Revised Activity Based Computations Activity Activity Base * Usage 250 DLH Activity Rate = $ 80 per DLH Activity Cost $ 20,000 Fabrication Setup 20 setups $ 960 Production Control 20 prod.runs $ 240 $ 48 per setup (80*60%) $ 12 per prod.run (30-60%) $ 15 per move (25-40%) Moving 20 moves $ 300 $ Total Activity cost Estimated units of production Activity cost per unit 21,500 500 43.00 $ Requirement A The revised activity cost per unit under the proposed changes is $43.00 per unit. Requirement B The improvements did not reduce the activity cost per unit. It increased the activity cost per unit from $ 42.70 to $ 43.00 per unit. Requirement C Total Setup activity cost (-) Reduction in Activity cost (21500-21350) Revised Setup cost No. of Setups Revised Activity cost per Setup $ $ $ 960 - 150 810 20 40.50 $ The cost per setup to equal the activity cost as per base solution is $ 40.50 per setup.