A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead cost is charged at the rate of $42 per hour. Production rate Daily production time Percent of parts rejected based on visual inspection Process 1 36 parts/hour 4 hours/day 21% The profit per day for Process 1 is $[ (Round to the nearest cent.) Process 2 15 parts/hour 7 hours/day 9%
A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead cost is charged at the rate of $42 per hour. Production rate Daily production time Percent of parts rejected based on visual inspection Process 1 36 parts/hour 4 hours/day 21% The profit per day for Process 1 is $[ (Round to the nearest cent.) Process 2 15 parts/hour 7 hours/day 9%
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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![A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for
manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally,
tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made
from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead
cost is charged at the rate of $42 per hour.
Production rate
Daily production time
Percent of parts rejected based on visual
inspection
Process 1
36 parts/hour
4 hours/day
21%
The profit per day for Process 1 is $. (Round to the nearest cent.)
Process 2
15 parts/hour
7 hours/day
9%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe103e755-30e1-46df-9fb6-88e22ca74a1c%2F3b97b2c0-417b-47ff-9ba5-cd64dc0bcc1f%2F7jxv9hm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for
manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally,
tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made
from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead
cost is charged at the rate of $42 per hour.
Production rate
Daily production time
Percent of parts rejected based on visual
inspection
Process 1
36 parts/hour
4 hours/day
21%
The profit per day for Process 1 is $. (Round to the nearest cent.)
Process 2
15 parts/hour
7 hours/day
9%
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