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(Solved): Atlas Inc. is a toy bicycle manufacturing company producing a five-inch small
Expert Answer
Answer
a. Maximum time is used by worker 2 to cover step 3 and 4. He consumes 30+35= 65 seconds. This is the limiting factor/bottleneck for the line.
In one hour (at one assembly line):
No. of cycles produced= 1hour/ 65 seconds= 3600 seconds/65 seconds = 55.38 cycles
Cost encurred = cost per worker per hour* number of workers= 15*5= $ 75
Hence, direct labor cost per bicycle= 75/55.38= $ 1.35
b. Fixed cost for one assembly line per hour is $ 75. It is given that total fixed cost per hour is $ 225. Hence, there are 3 assembly lines.
Profit= Price- cost
Price (per hour)= number of cycles per hour on one line*number of lines* sale price of each bicycle= 55.38*3*5= 830.7
Cost (per hour)= Fixed cost+variable cost= 225+ (55.38*3*1)= 391.14
Hence, Profit per hour= 830.7 – 391.14= $ 439.56
c. The price and fixed cost would not be affected, only variable cost would be affected.
Profit per hour= 830.7 – (225 +(55.38*3*0.89)) = $ 457.83
d. If only fixed cost is affected and price and variable costs are not affected then
Profit per hour= 830.7 – ( 198+ (55.38*3*1))= $ 466.56
e. If bottleneck time is reduced by 3 seconds i.e. to 62 seconds from 65 seconds:
No. of cycles produced per assembly line per hour= 1hour/ 62 seconds= 3600 seconds/62 seconds = 58.06 cycles
cycle produced per hour= 58.06*3= 174.19
Profit per hour= (174.19 * 5) – (225+(174.19*1))= 870.95 – 399.19 = $ 471.76
