Suppose the historical costs for the manufacture of a calculator by Radio Shack were as follows: direct materials, $5.00 per unit; and direct labor, $6.00 per unit. Management is trying to decide whether to replace some materials with different materials. The replacement should cut material costs by 10% per unit. However, direct-labor time will increase by 5% per unit. Moreover, direct-labor rates will be affected by a recent 10% wage increase.
Prepare an exhibit like Exhibit, showing where and how the data about direct material and direct labor fit in the decision process.

  • CreatedNovember 19, 2014
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