DC Watts, Inc., makes power cords for a variety of electronic products. Lately, it has been having significant problems with the quality of its output. It also appears that making a batch of power cords takes longer and longer. Donald Wright, the head of manufacturing, has just completed a study of one of the main power cord lines. The following is the list of activities, times, and costs estimates for the various activities.

It takes 0.5 minutes on the machine to make one power cord. The power cords normally sell for $8. After sorting out good from bad units, 80% were good units and 20% were bad.

REQUIRED:

a. Calculate the total elapsed time in this cycle.

b. Calculate the process time in this cycle. What percentage of time is used to complete process activities?

c. Determine how many power cords were successfully made during the morning shift.

d. Calculate the total cost of the operations.

e. Calculate the average cost of a good power cord.

f. Calculate the total process costs of operations. What percentage of cost is used for process activities?

g. Develop a rough profit analysis for the morning’s operations. Specifically, using the times and prices noted, determine how much revenue was generated by the morning’s production vs. how much cost was incurred. Set up your analysis as follows:

Revenue

Less: Process costs

Potential profit

Less: Non process costs

Profit (loss) for morning shift

h. What would you say to Donald about his operations? Why?

Transcribed Image Text:

Activity Time Cost Retrieve materials from stores Bminutes $60.00 Write up paperwork D minutes SA0.00 Produce 20 minutes S200 Recalibrate machine Bminutes $80.00 Sort out scrap units 30 minutes S00 Produce 60 minutes $360.00 Repair machine 60 minutes $240.00 Sort out scrap units 30 minutes SD0.00 Recalibrate machine Bminutes $80.00 Produce 30 minutes ŞIB0.00