What is the average cost of a good unit

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Reference no: EM13900520

The first operation cost 28 per unit. After the first operation the cases are inspected. Typically we find that 10% of the cases are rejected and discarded or 90% of those units inspected are accepted and are passed on to the second operation. Operation 2 cost 20 per unit processed. The units completing operation 2 are inspected at inspection station 2. Here 75% of the units are accepted and pass on. The other 25% are reprocessed at a cost of 5 each. After reprocessed units are completed, they are inspected and half of them pass inspection and are passed on, while the other half is discarded.

a. If we start with 1000 cases entering operation 1, how many of them are still acceptable at the end of operation 2?

b. what is the total cost of producing the number of good units you calculated above?

c. what is the average cost of a good unit?

Reference no: EM13900520

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