Directions: Answer the following questions by the due date. Use numerical calculations (if needed) to support your argument. Submit your answers through uploading a Microsoft Word file, Excel file or PDF. Tread-Force Fitness, Inc. assembles and sells elliptical machines. All activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order for it to remain competitive. Activity-based product information for each elliptical machine is as follows: (Hrs per unit) Activity Activity Based Usage x Activity rate / hr = Activity Cost Moving 0.20 $15 $3.00 Motor Assembly 1.50 $20 $30.00 Final Assembly 1.00 $18 $18.00 Testing 0.25 $22 $5.50 Rework 0.40 $22 $8.80 Activity Cost per unit $65.30 Rework involves disassembling and repairing a unit that fails testing. Not all units require rework, but the average is 0.40 hours per unit. Presently the testing is done on the completed assembly, but much of the rework has been related to motors, which can be tested independently prior to adding the motor to the elliptical machine during final assembly. Thus, motor issues can be diagnosed and solved without having to disassemble the complete machine. This change will reduce the average rework per unit by one-quarter. Questions: A. Determine the new activity cost per unit under the rework improvement scenario. B. If management had the choice of doing the rework improvement in (A) or cutting the moving activity in half by improving the product flow, which decision should be implemented and Why?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Instructions
Directions: Answer the following questions by the due date. Use numerical calculations (if needed) to support your argument. Submit your answers through uploading a Microsoft Word file, Excel file or PDF.
Tread-Force Fitness, Inc. assembles and sells elliptical machines. All activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order for it to remain competitive. Activity-based product information for each elliptical machine is as follows:
(Hrs per unit)
Activity Activity Based Usage x Activity rate / hr = Activity Cost
Moving 0.20 $15 $3.00
Motor Assembly 1.50 $20 $30.00
Final Assembly 1.00 $18 $18.00
Testing 0.25 $22 $5.50
Rework 0.40 $22 $8.80
Activity Cost per unit $65.30
Rework involves disassembling and repairing a unit that fails testing. Not all units require rework, but the average is 0.40 hours per unit. Presently the testing is done on the completed assembly, but much of the rework has been related to motors, which can be tested independently prior to adding the motor to the elliptical machine during final assembly. Thus, motor issues can be diagnosed and solved without having to disassemble the complete machine. This change will reduce the average rework per unit by one-quarter.
Questions:
A. Determine the new activity cost per unit under the rework improvement scenario.
B. If management had the choice of doing the rework improvement in (A) or cutting the moving activity in half by improving the product flow, which decision should be implemented and Why?
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