TidyCar washes vehicles using a nohands approach. Business is good but Jonathan, the manager, has noticed that
Question:
TidyCar washes 100 vehicles each day and last month, 40% of them required a hand finish. Each hand wash costs $15.
Jonathan believes the problem can be eliminated by a prewash (costing $2 per vehicle) and an equipment calibration at the start of each day, which will reduce the number of vehicles washed each day by 10, but will decrease the vehicles requiring a hand finish from 40% to 10%.
Required:
1. Should TidyCar implement Jonathan's idea? Show your calculations.
2. What nonfinancial and qualitative factors should TidyCar consider in deciding whether to implement the new design?
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Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
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