The following data refer to two different processes that are being considered for the manufacture of...

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The following data refer to two different processes that are being considered for the manufacture of a new design of "Tonka Mighty Dump Truck" (a popular children's toy) in a factory to be located in a new industrial park in El Paso, TX. METHOD A Initial cost of equipment and assembly of equipment = $480,000 Labor time for assembly of one toy: 8 minutes Labor cost: $12.00 per hour Material and tooling cost: $5.25 per toy METHOD B Initial cost of equipment and assembly of equipment = $750,000 Labor time for assembly of one toy: 4 minutes Labor cost: $12.00 per hour Material and tooling cost: $5.25 per toy FOR EITHER METHOD A OR METHOD B * 15 production hours per day for 300 days per year * Interest rate on loan from a commercial bank to buy the equipment and pay for its assembly in the factory: 9% per year * Period of analysis: 5 years By calculating the TOTAL cost of manufacture PER TOY using the two methods. comment on their relative economics. The following data refer to two different processes that are being considered for the manufacture of a new design of "Tonka Mighty Dump Truck" (a popular children's toy) in a factory to be located in a new industrial park in El Paso, TX. METHOD A Initial cost of equipment and assembly of equipment = $480,000 Labor time for assembly of one toy: 8 minutes Labor cost: $12.00 per hour Material and tooling cost: $5.25 per toy METHOD B Initial cost of equipment and assembly of equipment = $750,000 Labor time for assembly of one toy: 4 minutes Labor cost: $12.00 per hour Material and tooling cost: $5.25 per toy FOR EITHER METHOD A OR METHOD B * 15 production hours per day for 300 days per year * Interest rate on loan from a commercial bank to buy the equipment and pay for its assembly in the factory: 9% per year * Period of analysis: 5 years By calculating the TOTAL cost of manufacture PER TOY using the two methods. comment on their relative economics.

Answer rating: 100% (QA)

SOLUTION Based on the information provided we can calculate the total cost of manufacture per toy using Method A and Method B Method A Initial investment 480000 Labor cost per toy 525 Total cost per t... View the full answer