Tokuga Company makes printed circuit boards in a suburb of Tokyo. The production process is auto-mated with computer-controlled robotic machines assembling each circuit board from a supply of parts and then soldering the parts to the board. Materials-handling and quality-assurance activities use a combination of labor and equipment. Although a few resources that are used are variable with respect to changes in the demand of boards, these costs are not material compared to the fixed-cost resources that are used.
Tokuga makes three types of circuit boards, models 1, 2, and 3. Steps 1 and 2 of the design process for an ABC system have been completed. Exhibit 12-23 shows the process-based map of Tokuga’s operations.

1. Compute the cost of production for each of the three types of circuit boards and the cost per circuit board for each type.
2. What if the design of model 1 could be simplified so that it required only 8 distinct parts (instead of 20) and took only 3 minutes of testing time (instead of five). Compute the cost of model 1 circuit boards and the cost per circuit board. Will the costs per circuit board for models 2 and 3 change? You do not need to compute the costs per circuit board for models 2 and 3, only note whether the costs will increase, decrease, remain unchanged, or cannot be determined.Explain.

  • CreatedNovember 19, 2014
  • Files Included
Post your question