### Cost Analysis for Assembly Operation#### Problem Statement:A manufacturing firm has received a contract to assemble 1000 units of test equipment in the next year. The firm must decide how to organize its assembly operation. Below are the two approached being considered:1. **Skilled Workers**: - **Hourly Rate**: $33 per hour - **Assembly Time**: 2.6 hours per unit - **Cost Calculation**: \[ \text{Cost per unit using skilled workers} = 33 \text{ (rate per hour)} \times 2.6 \text{ (hours per unit)} = \$85.80 \] \[ \text{Total Cost for 1000 units} = 85.80 \times 1000 = \$85,800 \]2. **Less Skilled Workers (Team)**: - **Team Composition**: 4 workers - **Hourly Rate per Worker**: $19 per hour - **Assembly Time**: 1 hour per unit - **Cost Calculation**: \[ \text{Cost per unit using a team} = 19 \text{ (rate per hour per worker)} \times 4 \text{ (number of workers)} \times 1 \text{ (hour per unit)} = \$76 \] \[ \text{Total Cost for 1000 units} = 76 \times 1000 = \$76,000 \]#### Conclusion:The more economical approach for the manufacturing firm would be to use teams of four less skilled workers, as the total cost for assembling 1000 units would be $76,000 compared to $85,800 for skilled workers.This analysis helps in making an informed decision on the most cost-effective strategy for assembling the test equipment.

Number of units to be assembled = 1000 units Rate of skilled worker = $33 per hour Time taken by…

A manufacturing firm has received a contract to assemble 1000 units of test equipment in the next year. The firm must decide how to organize its assembly operation. Skilled workers, at $33 per hour each, can individually assemble the test equipment in 2.6 hours per unit. Alternatively, teams of four less skilled workers (at $19 per hour each) can assem- ble a unit in one hour. Which approach is more economical?

A manufacturing firm has received a contract to assemble 1000 units of test equipment in the next year. The firm must decide how to organize its assembly operation. Skilled workers, at $33 per hour each, can individually assemble the test equipment in 2.6 hours per unit. Alternatively, teams of four less skilled workers (at $19 per hour each) can assem- ble a unit in one hour. Which approach is more economical?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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