Question

Medical Instruments uses a manufacturing costing system with one direct cost category' (direct materials) and three indirect cost categories:
a. Setup, production order, and materials-handling costs that vary with the number of batches.
b. Manufacturing operations costs that vary with machine-hours.
c. Costs of engineering changes that vary with the number of engineering changes made.
In response to competitive pressures at the end of 2012, Medical Instruments used value engineering techniques to reduce manufacturing costs. Actual information for 2012 and 2013 is:

The management of Medical Instruments wants to evaluate whether value engineering has succeeded in reducing the target manufacturing cost per unit of one of its products, HJ6, by 10%.
Actual results for 2012 and 2013 for HJ6 are:

Required
1. Calculate the manufacturing cost per unit of HJ6 in 2012.
2. Calculate the manufacturing cost per unit of HJ6 in 2013.
3. Did Medical Instruments achieve the target manufacturing cost per unit for HJ6 in 2013? Explain.
4. Explain how Medical Instruments reduced the manufacturing cost per unit of HJ6 in 2013


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  • CreatedJuly 31, 2015
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