1. An industrial engineer has designed 2 alternative methods for accomplishing a production job. Both methods involve the acquisition of the same working place and other capital equipment to be used for this job only. Method A calls for a crew consisting of 3 men each costing P30/hr. This method will result in the production of 10 units/hr of which 2 will be rejects. Method B calls for a crew of 2 men each costing P35/hr and should result in the production of 8 units/hr of which 1 will be reject. The cost of the direct material lost in each reject is P20. If a certain total number of units is to be produced, find which method is NOT economical.

1. An industrial engineer has designed 2 alternative methods for accomplishing a production job. Both methods involve the acquisition of the same working place and other capital equipment to be used for this job only. Method A calls for a crew consisting of 3 men each costing P30/hr. This method will result in the production of 10 units/hr of which 2 will be rejects. Method B calls for a crew of 2 men each costing P35/hr and should result in the production of 8 units/hr of which 1 will be reject. The cost of the direct material lost in each reject is P20. If a certain total number of units is to be produced, find which method is NOT economical.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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