Question

Refer to the accompanying process chart for an automobile oil change. Complete parts​ (a) and​ (b) if: timesThe mechanic earns ​$35 per hour​ (including variable fringe​ benefits). timesThe process is performed twice per hour​ (on average). timesThe shop is open 320 days a​ year, 8 hours a day. timesThe mechanic does not get paid for idle time. timesThere can be only two cycles per hour regardless of the cycle time.a. The total labor cost associated with the process is $________ per year.b. If steps 7, 10, 12, and 15 were eliminated, the annual labor savings associated with implementing this new process would be $_______ per year.

Answer 1

Answer:

a. The total labour cost associated with the process is $124740 per year.

b. If steps 7, 10, 12, and 15 were eliminated, the annual labour savings associated with implementing this new process would be $12029 per year.

Explanation:

Part A:

Here, Total working hours in a year = 330 days * 9 hours/day = 2970 hours

It takes 28 mins to complete one cycle, i.e. mechanic works 28*2 = 56 mins per hour.

Total working hours per year for a mechanic = 2970 * 56/60 = 2772.00 hours

The mechanic is paid $45 per hour.

Therefore, Total Labor Cost = Cost per Hour * Total Hours = 2772 hours * $45 per hour = $124740 per year

Part B:

If steps 7, 10, 12, and 15 were eliminated, this will result into the save of 2.7 mins per cycle i.e. 2.7 * 2 = 5.4 mins per hour.

Total saving in a year = 5.4/60 * 2970 = 267.3 hours

Cost per hour is $45.

Hence, saving for a year after eliminating the given processes = 267.3 hours * $45 per hour = $12028.50