1- The XWZ engineers have found a way to reduce making time. The new method would cost an additional $100 per unit and would allow XWZ to manufacture 100 additional units a year. Should XWZ implement the new method? Show your calculations. 2- The XWZ’s designers have proposed a change in direct materials that would increase direct material costs by $5,000 per unit. This change would enable XWZ to mixing 600 units each year. If XWZ makes the change, it will implement the new design on all units sold. Should XWZ use the new design? Show your calculations 3- A new mixing technique has been developed that will enable XWZ’s engineers to make 5 additional units a year. The new method will increase mixing costs by $400,000 each year. Should XWZ implement the new technique? Show your calculations
The XWZ Industries manufactures pharmaceutical products in two departments: mixing and making. Additional information on the two departments is as follows (capacities are expressed in terms of the number of units of mixing):
Mixing Making
Annual capacity 500 units per year 800 units per year
Mixing and making 500 units per year 500 units per year
The XWZ manufactures only 500 units per year because the mixing department has only enough capacity to mix 500 units. The product sells for $100,000 per unit and has direct material costs of $40,000. All costs other than direct material costs are fixed. The following requirements refer only to the preceding data. There is no connection between the requirements.
Required
1- The XWZ engineers have found a way to reduce making time. The new method would cost an additional $100 per unit and would allow XWZ to manufacture 100 additional units a year. Should XWZ implement the new method? Show your calculations.
2- The XWZ’s designers have proposed a change in direct materials that would increase direct material costs by $5,000 per unit. This change would enable XWZ to mixing 600 units each year. If XWZ makes the change, it will implement the new design on all units sold. Should XWZ use the new design? Show your calculations
3- A new mixing technique has been developed that will enable XWZ’s engineers to make 5 additional units a year. The new method will increase mixing costs by $400,000 each year. Should XWZ implement the new technique? Show your calculations
4- XWZ is considering to motivate workers in the two departments, by compensating them on the basis of their productivities. Do you think that is a good idea? Explain briefly-
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