Question

A value stream has three activities and two products. The units produced and shipped per week are 50 of the deluxe model (Model A) and 150 of the basic model (Model B). The resource consumption patterns are shown as follows:

	Model A		Model B		Costs of Value- Stream Activities
Cell manufacturing	2,380	min.	7,140	min.	$	57,120
Engineering	65	hrs.	234	hrs.		26,013
Testing	95	hrs.	247	hrs.		27,360
Total					$	110,493

Required:

1. Calculate the ABC product cost for Models A and B. If required, round your answers to the nearest cent.

	Product Cost Per Unit
Model A	$ per unit
Model B	$ per unit

2. Calculate the value-stream average product cost. If required, round your answer to the nearest cent.
$ per unit

Assuming reasonable stability in the consumption patterns of the products and product mix, assess how well the products are grouped based on similarity.

- Select your answer -The two value-stream products are similarThe two value-stream products are not similarNot enough information is given to answer

Answer 1

1

Per unit product cost		Model A	Model B
		550.70	553.05
		27535.00	82958.00

2

Average cost (550.70*40)+(553.05*150)/(50+150)

552.47

Working notes for the above answer is as under