Tokuga Company makes printed circuit boards in a suburb of
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.
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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.
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