An assembly line can produce 90 units per hour. The line's hourly cost (total salaries of workers) is $4,283 an hour (the first 8 hours). Workers are guaranteed a minimum of 6 hours (i. e., they will be paid for 6 hours per day, even if they work less than 6 hours). There is a 50% premium for overtime (i. e., salary is increased 50% during overtime hours), however, productivity for overtime drops by 7% (i. e., the number of units produced per hour drops 7%). What is the total costs if 966 units needs to be produced?

Instructions are listed below

Explanation:

Giving the following information:

An assembly line can produce 90 units per hour.

The line's hourly cost (total salaries of workers) is $4,283 an hour (the first 8 hours).

Workers are guaranteed a minimum of 6 hours.

There is a 50% premium for overtime

Productivity for overtime drops by 7%

Units produced in over time = 90*0.93 = 83.7

What are the total costs if 966 units need to be produced?

We will calculate the costs in two different scenarios. First, the units will be made in one day. In the second one, units will be made in two days.

One day production:

An 8-hour shift can produce 720 units.

The 246 units remaining will take extra hours.

Units produced in over time = 90*0.93 = 83.7

Hours to produce 246 units = 246/83.7 = 3hours

Total cost = one 8 hour shift + 3extra hours

Total cost = 4,283 * 8 + (4,283 * 1.5) * 3 = $53537.5

Two-day production:

Total cost = one 8 hour shift + 6 hours

Total cost = 4238*8 + 4238*6 = $83332