Yamaguchi Company makes printed circuit boards in a suburb of Kyoto. The production process is automated...

Transcribed Image Text:

Yamaguchi Company makes printed circuit boards in a suburb of Kyoto. The production process is automated with computer-controlled robotic machines, assembling each circuit board from a supply of parts. Yamaguchi has identified four activities: ACTIVITY COST DRIVER Materials handling Cost of DM Assembly # of parts RATE 5% of DM cost 50 per part Soldering # of circuit boards 1,500 per board Quality assurance Minutes of testing 400 per minute Yamaguchi makes three types of circuit boards, models I, II, and III. Requirements for production of each circuit board are: Model I Model II Model III Price per unit 9,000 12,000 15,000 DM cost 4,000 6,000 8,000 # of parts 60 .40 20 Minutes of testing 5 3 2 Don Riujin, Yamaguchi's financial manager, acknowledged that all models must be produced profitably, or else the company would seriously consider dropping the model. Ch6-4 Required: 1. Compute the cost per circuit board for each type. [Note for reference: the foreign exchange rate as of October 25, 1999 was 105.35 per dollar.] Based on your analysis, what do you recommend Yamaguchi do? 2. Suppose the design of Model I could be simplified so that it required only 30 parts (instead of 60) and took only 3 minutes of testing time (instead of 5). What would be the cost per circuit board for Model I circuit boards? 0h6-5 Yamaguchi Company makes printed circuit boards in a suburb of Kyoto. The production process is automated with computer-controlled robotic machines, assembling each circuit board from a supply of parts. Yamaguchi has identified four activities: ACTIVITY COST DRIVER Materials handling Cost of DM Assembly # of parts RATE 5% of DM cost 50 per part Soldering # of circuit boards 1,500 per board Quality assurance Minutes of testing 400 per minute Yamaguchi makes three types of circuit boards, models I, II, and III. Requirements for production of each circuit board are: Model I Model II Model III Price per unit 9,000 12,000 15,000 DM cost 4,000 6,000 8,000 # of parts 60 .40 20 Minutes of testing 5 3 2 Don Riujin, Yamaguchi's financial manager, acknowledged that all models must be produced profitably, or else the company would seriously consider dropping the model. Ch6-4 Required: 1. Compute the cost per circuit board for each type. [Note for reference: the foreign exchange rate as of October 25, 1999 was 105.35 per dollar.] Based on your analysis, what do you recommend Yamaguchi do? 2. Suppose the design of Model I could be simplified so that it required only 30 parts (instead of 60) and took only 3 minutes of testing time (instead of 5). What would be the cost per circuit board for Model I circuit boards? 0h6-5