$5.00 Accounting 561 2-61
- From Business: Accounting , Business: Accounting
- Closed, but you can still post tutorials
- Due on Oct. 20, 2009
- Asked on Oct 19, 2009 at 3:26:16PM
Q:
2-61 CVP in a Modern Manufacturing Environment
A division of Hewlett-Packard Company changed its production operations from one where a
large labor force assembled electronic components to an automated production facility dominated
by computer-controlled robots. The change was necessary because of fierce competitive pressures.
Improvements in quality, reliability, and flexibility of production schedules were necessary just to
match the competition. As a result of the change, variable costs fell and fixed costs increased, as
shown in the following assumed budgets:
Old Production Operation New Production Operation
Unit variable cost
Material $ .88 $ .88
Labor 1.22 .22
Total per unit $ 2.10 $ 1.10
Monthly fixed costs
Rent and depreciation $450,000 $ 875,000
Supervisory labor 80,000 175,000
Other 50,000 90,000
Total per month $580,000 $1,140,000
