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?

Question

Charlie Russell

Business

3 January, 17:33

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?

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Caitlin Bean · Answer 1

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