Question

Patient Care 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 2011, Patient Care Instruments used value- engineering techniques to reduce manufacturing costs. Actual information for 2011 and 2012 is as follows:


The management of Patient Care Instruments wants to evaluate whether value engineering has succeeded in reducing the target manufacturing cost per unit of one of its products, HJ6, by 5%. Actual results for 2011 and 2012 for HJ6 are:



Required
1. Calculate the manufacturing cost per unit of HJ6 in 2011.
2. Calculate the manufacturing cost per unit of HJ6 in 2012.
3. Did Patient Care Instruments achieve the target manufacturing cost per unit for HJ6 in 2012? Explain.
4. Explain how Patient Care Instruments reduced the manufacturing cost per unit of HJ6 in 2012.
5. What challenges might managers at Patient Care Instruments encounter in achieving the target cost and how might they overcome thesechallenges?


$1.99
Sales1
Views94
Comments0
  • CreatedJanuary 15, 2015
  • Files Included
Post your question
5000