- Two Alternative Designs Are Under Consideration For A Tapered Fastening Pin The Fastening Pins Are Sold For 0 70 Each 1 (95.95 KiB) Viewed 27 times
Two alternative designs are under consideration for a tapered fastening pin. The fastening pins are sold for $0.70 each. Either design will serve equally well and will involve the same material and manufacturing cost except for the lathe and drill operations. Design A will require 12 hours of lathe time and 5 hours of drill time per 1,000 units. Design B will require 7 hours of lathe time and 8 hours of drill time per 1,000 units. The variable operating cost of the lathe, including labor, is $18.60 per hour. The variable operating cost of the drill, including labor, is $16.90 per hour. Finally, there is a sunk cost of $5,000 for Design A and $9,000 for Design B due to obsolete tooling. a. Which design should be adopted if 125,000 units are sold each year? b. What is the annual saving over the other design? 1:27 AM