problem 1: The Company have now added one more process to their product’s line. The new process is to label their products to reflect their compliance to new international standards. The new line operates at 60 units per hour. The operating cost of the new line is £6500/week, including capital recovery find outd over its nominal 10 years asset life in addition to £22 per hour the cost of materials used in the production of labels. Knowing that the company only operates 8 hours per working day, determine the unit cost of the labelling process based on:
a) 5 working days per week
b) 7 working days per week
problem 2: Measure the impact of changing activity levels on engineering business performance.
A data switch company specialises in the production of switches that can be used to link several personal computers to a shared printer. The company manufactures a low-cost manually operated data switch and a more expensive automatic data switch. Both types of switches are packed in multiples of five before they are despatched to retail outlets. An analysis of the company’s production reveals the following:
A) Determine the cost of each product using activity based costing?
B) Discuss the suitability of this type of costing for the engineering business of this company and the company you established in Task first.
C) Measure the impact on the business performance of changing all the company products from Manual to Automatic data switch and producing the whole production volume (2000 units). Discuss the advantages and disadvantages of such activity on the performance of the whole business.