nter cengagenov X My Home * CengageNOWv2 | Online teach x Target Costing | Formula | Exar X + signment/takeAssignmentMain.do?invoker%3D&takeAssignmentSessionLocator=D&inprogress3Dfalse eBook Calculator E Print Item Activity-Base Usage Activity Rate Activity Activity (hrs. per unit) X per Hour Cost 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 Moving 0.20 15 3.00 Activity cost per unit $65.30 All of the activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order to remain competitive. 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 treadmill during final assembly. Thus, motor issues can be diagnosed and solved without having to disassemble the complete treadmill. This change will reduce the average rework per unit by one-quarter. a. Determine the new activity cost per unit under the rework improvement scenario. Round your answer to 2 decimal place. Activity cost per unit $ 0.40 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? Why? 1. The cost reduction under moving activity is more than rework improvement, hence the management should select moving activity. 2. The cost reduction under rework improvement is more than the moving activity, hence the management should select rework improvement. 3. The cost reduction under both scenarios is same, the management can select either of them. Check My Work Previous Next 9:22 PM 4/17/202 FS F6 F7 F8 F9 F10 Home F11 F12 End Insert పాస & Back
nter cengagenov X My Home * CengageNOWv2 | Online teach x Target Costing | Formula | Exar X + signment/takeAssignmentMain.do?invoker%3D&takeAssignmentSessionLocator=D&inprogress3Dfalse eBook Calculator E Print Item Activity-Base Usage Activity Rate Activity Activity (hrs. per unit) X per Hour Cost 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 Moving 0.20 15 3.00 Activity cost per unit $65.30 All of the activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order to remain competitive. 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 treadmill during final assembly. Thus, motor issues can be diagnosed and solved without having to disassemble the complete treadmill. This change will reduce the average rework per unit by one-quarter. a. Determine the new activity cost per unit under the rework improvement scenario. Round your answer to 2 decimal place. Activity cost per unit $ 0.40 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? Why? 1. The cost reduction under moving activity is more than rework improvement, hence the management should select moving activity. 2. The cost reduction under rework improvement is more than the moving activity, hence the management should select rework improvement. 3. The cost reduction under both scenarios is same, the management can select either of them. Check My Work Previous Next 9:22 PM 4/17/202 FS F6 F7 F8 F9 F10 Home F11 F12 End Insert పాస & Back
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Could you help me find the activity cost per unit
Transcribed Image Text:nter cengagenov X My Home
* CengageNOWv2 | Online teach x
Target Costing | Formula | Exar X +
signment/takeAssignmentMain.do?invoker%3D&takeAssignmentSessionLocator=D&inprogress3Dfalse
eBook
Calculator
E Print Item
Activity-Base
Usage
Activity Rate
Activity
Activity
(hrs. per unit) X
per Hour
Cost
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
Moving
0.20
15
3.00
Activity cost per unit
$65.30
All of the activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order to remain competitive.
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 treadmill during final assembly. Thus, motor issues can be diagnosed and solved without having to disassemble the complete
treadmill. This change will reduce the average rework per unit by one-quarter.
a. Determine the new activity cost per unit under the rework improvement scenario. Round your answer to 2 decimal place.
Activity cost per unit $
0.40
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? Why?
1. The cost reduction under moving activity is more than rework improvement, hence the management should select moving activity.
2. The cost reduction under rework improvement is more than the moving activity, hence the management should select rework improvement.
3. The cost reduction under both scenarios is same, the management can select either of them.
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