Clip-A - Long makes binder clips of various sizes. The clips are made on one machine that takes precut strips of metal, bends them, adds the flange that helps hold the papers, and then boxes them in groups of 10. Materials cost $0.05 per clip. The items sell for $1.25 per box. The machine usually has $1,800,000 in committed costs and $600,000 in managed costs for a year and runs three shifts of 2,000 hours each.

REQUIRED:

a. Calculate the managed cost per hour.

b. Calculate the committed cost per hour.

c. It takes two seconds to make and package one box (its cycle time). Using competitive cost, what does it cost to make one box of clips?

d. Using your cost estimate, what is the profit per box? Make sure to include materials in your calculations.