You have received the part drawing for a typical lathe part that will require turning, facing, grooving, boring, and threading as it is machined from a casting. See Figure 32-D. Unfortunately, you do not yet know how many of these parts will be ordered this year, so you do not know what the build quantity will be. To be prepared, you have developed some cost data for the manufacture of the part by four different lathe processes (see Table 32-B). Complete the table by determining the run cost per batch, the cost per unit at the various quantities, and the total cost per batch.
Answer the following questions regarding this situation:
1. Of the four costs listed for each process, which costs are fixed and which are variable?
2. What is included in the cost per unit? Do you need to estimate the machining time per piece and the cycle time per piece, including the time to change parts and setups in order to compute run cost?
3. How would you go about estimating this time, and what time elements might be included in the cycle time in addition to the machining time?
4. How would you use this estimate of time in the cost table? Show the calculation.
5. Make a plot of cost in dollars versus quantity, with all four methods on one plot.
6. Make a plot of cost per unit versus quantity, again with all four methods on one plot. Find the breakeven quantities.