Chapter 18, Problem 3MAD

Labor classification trade-off

Skidmore Electronics manufactures consumer electronic products. The company has three assembly labor classifications, S-1, S-2, and S-3. The three classifications are paid $15, $18, and $22 per hour, respectively. The assembly activity for a new smartphone is as follows:

A product engineer proposes using a higher-rated employee to perform the assembly on the new phone. His analysis has shown that an S-3 employee can perform the assembly in 0.35 hour per unit.

1. A. Determine the Assembly activity cost using the S-3 labor classification.
2. B. Is the product engineer’s proposal supported?