Ashley Technology Inc. manufactures a scrambling device for cellular telephones. The device’s main component is a delicate part, CT140. CT140 is easily damaged and requires careful handling. Once damaged, it must be discarded. The firm hires only skilled laborers to manufacture and install CT140; however, some are still damaged. Robotic instruments process all other parts. Ashley’s operating data for 2 years are as follows:
| 2019 | 2018 | ||||||
| Units manufactured | 750,000 | 1,000,000 | |||||
| Number of CT140 used | 900,000 | 1,050,000 | |||||
| Number of direct labor hours spent | 150,000 | 200,000 | |||||
| Cost of CT140 per unit | $ | 156 | $ | 135 | |||
| Direct labor wage rate per hour | $ | 56 | $ | 62 | |||
Assume that fixed manufacturing costs are $50 million in both 2018 and 2019.
Required:
1. Compute the total productivity ratios for 2018 and 2019
| Partial operational productivity | ||
| For direct materials | 2019 | 2018 |
| Partial operational productivity = Total output / Total input | ||
| Total output | 750,000 | 1,000,000 |
| Number of CT140 used | 900,000 | 1,050,000 |
| Partial operational productivity | 0.83 | 0.95 |
| For direct labour | 2019 | 2018 |
| Partial operational productivity = Total output / Total input | ||
| Total output | 750,000 | 1,000,000 |
| Number of direct labour hours spent | 150,000 | 200,000 |
| Partial operational productivity | 5.00 | 5.00 |
Get Answers For Free
Most questions answered within 1 hours.