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Detroit Manufacturing Company (DMC) 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 DMC's Standard Data System and then checked with a stop-watch study. DMC works a 8 hour 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 $14.25 per hour. Below is a summary of the methods Department's stop-watch study. Product #42458 150 cycles timed (all in seconds) Element Average Time (sec) Performance Rating (%) 1 200 110 2345 2 80 100 3 150 85 4 225 90 5 6 75 70 120 110 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 115% of standard with an average scrap rate of 4%? 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 4%? D. The Sales Department is about to sign a contract for 5000 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 $1.25 per unit, what is the profit contribution (or loss) to the company for accepting this contract?

Detroit Manufacturing Company (DMC) 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 DMC's Standard Data System and then checked with a stop-watch study. DMC works a 8 hour 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 $14.25 per hour. Below is a summary of the methods Department's stop-watch study. Product #42458 150 cycles timed (all in seconds) Element Average Time (sec) Performance Rating (%) 1 200 110 2345 2 80 100 3 150 85 4 225 90 5 6 75 70 120 110 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 115% of standard with an average scrap rate of 4%? 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 4%? D. The Sales Department is about to sign a contract for 5000 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 $1.25 per unit, what is the profit contribution (or loss) to the company for accepting this contract?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Detroit Manufacturing Company (DMC) 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 DMC's Standard Data System and then checked with a stop-watch study. DMC works a 8 hour 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 $14.25 per hour. Below is a summary of the methods Department's stop-watch study. Product #42458 150 cycles timed (all in seconds) Element Average Time (sec) Performance Rating (%) 1 200 110 2345 2 80 100 3 150 85 4 225 90 5 6 75 70 120 110 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 115% of standard with an average scrap rate of 4%? 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 4%? D. The Sales Department is about to sign a contract for 5000 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 $1.25 per unit, what is the profit contribution (or loss) to the company for accepting this contract?
Transcribed Image Text:Detroit Manufacturing Company (DMC) 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 DMC's Standard Data System and then checked with a stop-watch study. DMC works a 8 hour 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 $14.25 per hour. Below is a summary of the methods Department's stop-watch study. Product #42458 150 cycles timed (all in seconds) Element Average Time (sec) Performance Rating (%) 1 200 110 2345 2 80 100 3 150 85 4 225 90 5 6 75 70 120 110 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 115% of standard with an average scrap rate of 4%? 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 4%? D. The Sales Department is about to sign a contract for 5000 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 $1.25 per unit, what is the profit contribution (or loss) to the company for accepting this contract?
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