Washington’s engineers have found a way to reduce equipment manufacturing time. The new method would cost an additional $500 per unit and would allow Washington to manufacture 30 additional units a year. Should Washington implement the new method? Show your calculations. Washington Industries manufac-tures electronic testing equipment. Washington also installs the equipment at customers' sites and en-sures that it functions smoothly. Additional information on the manufacturing and installation departmentsis as follows (capacities are expressed in terms of the number of units of electronic testing equipment):Annual capacityEquipment manufactured and installedEquipment Manufactured285 units per year250 units per yearEquipment Installed250 units per year250 units per yearWashington manufactures only 250 units per year because the installation department has only enoughcapacity to install 250 units. The equipment sells for $55,000 per unit (installed) and has direct material costsof $30,000. All costs other than direct material costs are fixed. The following requirements refer only to thepreceding data. There is no connection between the requirements.

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Answered: Washington Industries manufac- tures…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Washington’s engineers have found a way to reduce equipment manufacturing time. The new method would cost an additional $500 per unit and would allow Washington to manufacture 30 additional units a year. Should Washington implement the new method? Show your calculations.

Washington Industries manufac-
tures electronic testing equipment. Washington also installs the equipment at customers' sites and en-
sures that it functions smoothly. Additional information on the manufacturing and installation departments
is as follows (capacities are expressed in terms of the number of units of electronic testing equipment):
Annual capacity
Equipment manufactured and installed
Equipment Manufactured
285 units per year
250 units per year
Equipment Installed
250 units per year
250 units per year
Washington manufactures only 250 units per year because the installation department has only enough
capacity to install 250 units. The equipment sells for $55,000 per unit (installed) and has direct material costs
of $30,000. 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.

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