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A single-component product is estimated for cost and price for a lot of 175 units....

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Accounting

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A single-component product is estimated for cost and price for a lot of 175 units. The operation estimates for this product are as follows: Operation Setup (hr) 0.1 Shear Pierce Countersin Cycle (hr/unit 0.001 0.038 0.043 0.5 0.6 0.2 Brake Weld Grind Deburr 0.010 0.035 0.020 0.006 0.1 0.4 Average shop labor is $17.25 per hr. Factory overhead is 75% of direct labor, material cost and overhead per unit is $0.075, and G&A is 25% of the cost of goods manufactured. There is no selling or contingency cost. The markup on full cost is 20%. a) Develop a system of cost estimating, and find the unit and lot cost and price. b) Which operation is most costly? If a 50% reduction can be achieved in this operation. what addition to profit would be expected at the same selling price? (Hint: Assume that profit is increased only by direct-labor cost reduction)

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