Chapter 5 Calculation - Chapter 5 Calculation Page 194...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5 Calculation Page 194 Example A department works one 8-hour shift, 250 days per year, and has these figures for usage of a machine that is currently being considered: Product (1) D i Annual Demand (2) P i Standard processing time per unit .(Hr) (3) Processing time needed (Hr) (2)*(3) D i * P i 1 400 5.0 400*5 =2000 2 300 8.0 300*8 = 2400 3 700 2.0 700*2 =1400 5800 horizon planning the during available time processing horizon planning the during product for demand product for time processing standard machines required of number where 1 = = = = = ∑ = T i D i p N T D p N i i R k i i i R Working one 8-hour shift 250 days a year provides an annual capacity= 8 *250 = 2000 hours per year=T Required volume = 5800 hours/(2000hours/machine =2.90 machines = 5800/2000 Page 202 Cost-Volume Analysis • Cost-volume analysis – Focuses on the relationship between cost, revenue, and volume of output • Fixed Costs (FC) – tend to remain constant regardless of output volume • Variable Costs (VC) – vary directly with volume of output – VC = Quantity ( Q ) x variable cost per unit ( v ) • Total Cost – TC = Q x v • Total Revenue (TR) – TR = revenue per unit ( R ) x Q Break-Even Point (BEP) • BEP – The volume of output at which total cost and total revenue are equal – Profit ( P ) = TR – TC =...
View Full Document

This note was uploaded on 01/11/2012 for the course MANAGEMENT mgt3904 taught by Professor Ye during the Winter '11 term at Assumption College.

Page1 / 9

Chapter 5 Calculation - Chapter 5 Calculation Page 194...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online