Ask Question
BusinessBusiness
16 March, 06:03

A laptop manufacturer wants to compare the total cost of assembling its laptops in the United States versus Taiwan. All of the laptops will be sold in the United States. To evaluate inventory, it uses a safety factor of 2.25. The holding cost per laptop is $4 per week in the United States and $3.50 per week in Taiwan. The lead time with U. S. production is one week, whereas it is eight weeks with production in Taiwan. In addition, it costs $2 to ship laptops to the United States from Taiwan. Weekly demand is 1,000 laptops, with a standard deviation of 800.

a. What is the per-unit holding cost of a laptop with U. S. production?

b. What is the per-unit holding cost of a laptop with production in Taiwan?

c. A laptop requires 40 minutes of labor to assemble in the United States or in Taiwan. The total cost of labor in the United States is $40 per hour, while in Taiwan it is $10. What is the change in cost per laptop if it switches production to Taiwan?

+2
Answers (1)
  1. 16 March, 08:51
    0
    a. The per-unit holding cost of a laptop with U. S. production is $16.724

    b. The per-unit holding cost of a laptop with production in Taiwan is $51.625

    c. The change in cost per laptop if it switches production to Taiwan is $16,891 per unit

    Explanation:

    a. According to the given data we have the following:

    U. S. production on-order inventory is 1 * 1,000 = 1,000 units.

    U. S. production on-hand inventory is sqrt (1 + 1) * 1,000 * 2.25 = 3,181 units.

    To calculate the per-unit holding cost of a laptop with U. S. production we would have to use the following formula:

    Average holding cost per unit with U. S. production=Average weekly holding cost/weekly demand

    Total average inventory is 1,000 + 3,181 = 4,181 units.

    Average weekly holding cost is $4 * 4,181 = $16,724.

    Therefore, Average holding cost per unit with U. S. production = 16,724 / 1,000 = $16.724

    b. According to the given data we have the following:

    Taiwan on-order inventory production in is 8 * 1,000 = 8,000 units.

    Taiwan on-hand inventory production is sqrt (8 + 1) * 1,000 * 2.25 = 6,750 units.

    Total average inventory is 8,000 + 6,750 = 14,750

    Average weekly holding cost is $3.5 * 14,750 = $51,625

    Average holding cost per unit with production in Taiwan is 51,625 / 1,000 = $51.625

    c. To calculate the change in cost per laptop if it switches production to Taiwan we would have to make the following calculations:

    United States production stays, the labor cost per unit is $40 * 2/3 = $26.67.

    There is no transportation cost, and the average holding cost per unit is $16.724

    The total cost is 26.67 + 16.724 = $43.394 per unit.

    Taiwan production, the labor cost per unit is $10 * 2/3 = $6.66

    There is a $2 per unit transportation cost and an average holding cost per unit of $51.625

    This is a total of 6.66 + 2 + 51.625 = $60.285 per unit.

    Therefore, If production moves to Taiwan, the cost increases by 60.285 - 43.394 = $16.891 per unit.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A laptop manufacturer wants to compare the total cost of assembling its laptops in the United States versus Taiwan. All of the laptops will ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
What is the difference between a nominal value and a real value? a. A nominal value is measured in monetary units adjusted for inflation, unlike a real value. b.
Answers (1)
What type of event would cause two separate journal entries to be made? a. selling the goods b. closing overapplied overhead to cost of goods sold c. transferring the goods to finished goods d.
Answers (1)
Determine what a person should take into account when purchains expensive, durable goods.
Answers (1)
Tammi wants to buy a new stereo system. She finds one for $500 at Stereo City. She withdraws $250 from her account at First National Bank and obtains a loan from her parents for the rest of the amount. Then she purchases the stereo.
Answers (1)
Large expenses such as the purchase of a new mri machine or the building of a new office is known as:
Answers (1)
New Questions in Business
Using the following information, what is the amount of net income? Purchases $ 33,189 Selling expenses $ 758 Merchandise inventory, September 1 7,436 Merchandise inventory, September 30 8,978 Administrative expenses 760 Sales 51,684 Rent revenue 832
Answers (1)
You are managing a project and need to cut the cost of the project. You decide to transfer workers to another job to cut the project's costs. Costs associated with transferring the workers are an example of project indirect costs. O True O False
Answers (1)
K Inc. has provided the following data for the month of May: Inventories: Beginning Ending Work in process $ 17,000 $ 12,000 Finished goods $ 46,000 $ 50,000 Additional information: Direct materials $ 57,000 Direct labor cost $ 87,000 Manufacturing
Answers (1)
Marcy Tucker received the following items this year. Determine to what extent each item is included in her AGI. (Leave no cells blank - be sure to enter "0" wherever required.) A $25,000 cash gift from her parents.
Answers (1)
Analysis of daily output of a factory during a 8-hour shift shows that the hourly number of units y produced after t hours of production is
Answers (1)
Home » Business » A laptop manufacturer wants to compare the total cost of assembling its laptops in the United States versus Taiwan. All of the laptops will be sold in the United States. To evaluate inventory, it uses a safety factor of 2.25.
Sign Up Forgot Password?