Question

Venus Robotics can produce 23,000 robots a year on its daytime shift. The fixed manufacturing costs per year are $2 million and the total labor cost is $9,109,000. To increase its production to 46,000 robots per year, Venus is considering adding a second shift. The unit labor cost for the second shift would be 25% higher than the day shift, but the total fixed manufacturing costs would increase only to $2.4 million from $2 million. (a) Compute the unit manufacturing cost for the daytime shift. (b) Would adding a second shift increase or decrease the unit manufacturing cost at the plant?

Answer 1

Answer:

Explanation:

Giving the following information:

Venus Robotics can produce 23,000 robots a year on its daytime shift. The fixed manufacturing costs per year are $2 million and the total labor cost is $9,109,000.

Unitary labor cost= 9,109,000/23000= 396

1) Manufacturing cost= 2000000 + 9109000= 11,109,000

Unitary= 11,109,000/23000= $483

2) Manufacturing cost= (396*1.25)*46000+ 2,400,000= 25,170,000

Unitary costs= 25,170,000/46000= $547