Toledo Plastics has developed a product which incorporates new features with a standard product design. A production
Question:
Toledo Plastics has developed a product which incorporates new features with a standard product design. A production prototype has been built and the Methods Department has developed a job design for the production of the new product. Elemental times were taken from the Standard Data System and then checked with a stop-watch study.
Toledo Plastics runs one 8 hour shift per day, 5 days a week and provides workers a 90 minute daily allowance for personal time and other contingencies. Daily standards are calculated as the normal time for the job divided by 1 - % Allowance. Production workers earn $25.00 per hour.
Below is a summary of the methods Department's stop-watch study.
*Three cycles thrown out of calculation due to machine slippage. Average based on 147 cycles.
A. Using the time study data collected, develop a standard time for this job. State the standard in parts per hour. (carry your answer out to two decimal places)
B. What is the current weekly nominal capacity for a production worker who works at 112% of standard with an average scrap rate of 2%
C. Assuming there are 15 workers producing this product, what rate of efficiency must the workers average if they are to meet a weekly demand of 2,600 units given an average scrap rate is 5%?
D. The Sales Department is about to sign a contract for 4000 units of product #4356. The customer is demanding a contract price of $80,000 for the units. If fixed costs (overhead) is assessed at 150% of the sum of direct labor cost and material cost per unit, and the direct material cost is $1.20 per unit, what is the profit contribution (or loss) to the company for accepting this contract?
Expert Answer:
