The Goodparts Company produces a component that is subsequently used in the aerospace industry. The component consists of three parts (A, B, and C) that are purchased from outside and cost 40, 35, and 15 cents per piece, respectively. Parts A and B are assembled first on assembly line 1, which produces 170 components per hour. Part C undergoes a drilling operation before being finally assembled with the output from assembly line 1. There are, in total, six drilling machines, but at present only three of them are operational. Each drilling machine drills part C at a rate of 70 parts per hour. In the final assembly, the output from assembly line 1 is assembled with the drilled part C. The final assembly line produces at a rate of 190 components per hour. At present, components are produced eight hours a day and five days a week. Management believes that if the need arises, it can add a second shift of eight hours for the assembly lines. The cost of assembly labor is 30 cents per part for each assembly line; the cost of drilling labor is 10 cents per part. For drilling, the cost of electricity is 2 cent per part. The total overhead cost has been calculated as $1,100 per week. The depreciation cost for equipment has been calculated as $30 per week. d-1 = $1.72 cost per unit e. The product is sold at $4 per unit. Assume that the cost of a drilling machine (fixed cost) is $30,000 and the company produces 8,400 units per week. Assume that four drilling machines are used for production. If the company had an option to buy the same part at $3 per unit, what would be the break-even number of units? (In your calculations, use the two-digit cost per unit from page d-1. Round your answer to the nearest whole number.)
The Goodparts Company produces a component that is subsequently used in the aerospace industry. The component consists of three parts (A, B, and C) that are purchased from outside and cost 40, 35, and 15 cents per piece, respectively. Parts A and B are assembled first on assembly line 1, which produces 170 components per hour. Part C undergoes a drilling operation before being finally assembled with the output from assembly line 1. There are, in total, six drilling machines, but at present only three of them are operational. Each drilling machine drills part C at a rate of 70 parts per hour. In the final assembly, the output from assembly line 1 is assembled with the drilled part C. The final assembly line produces at a rate of 190 components per hour. At present, components are produced eight hours a day and five days a week. Management believes that if the need arises, it can add a second shift of eight hours for the assembly lines.
The cost of assembly labor is 30 cents per part for each assembly line; the cost of drilling labor is 10 cents per part. For drilling, the cost of electricity is 2 cent per part. The total overhead cost has been calculated as $1,100 per week. The depreciation cost for equipment has been calculated as $30 per week.
d-1 = $1.72 cost per unit
e. The product is sold at $4 per unit. Assume that the cost of a drilling machine (fixed cost) is $30,000 and the company produces 8,400 units per week. Assume that four drilling machines are used for production. If the company had an option to buy the same part at $3 per unit, what would be the break-even number of units? (In your calculations, use the two-digit cost per unit from page d-1. Round your answer to the nearest whole number.)
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