Ambrosia Corp Materials Usage Has a Rate of $6 Per Part and It

question 59

Multiple Choice

Ambrosia Corp. is a manufacturer of equipment used in manufacturing. It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9. Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part configuration are provided below: $\begin{array}{|l|l|l|l|l|}\hline{\text { Activities }} & \text { Activity } & \text { Activity } & \text { Current } & \text { Expected } \\& \text { Driver } & \text { Capacity } & \text { Activity Demand } & \text { Activity Demand } \\\hline \text { Materials } & \begin{array}{l}\text { pumber of } \\\text { uarts }\end{array} & 300,000 & 300,000 & 90,000 \\\hline \text { Assembly } & \begin{array}{l}\text { direct } \\\text { labor } \\\text { hours }\end{array} & 20,000 & 20,000 & 6,000 \\\hline \begin{array}{l}\text { Purchasing } \\\text { parts }\end{array} & \begin{array}{l}\text { orders of }\end{array} & 20,000 & 16,000 & 8,000 \\\hline\end{array}$
Materials usage has a rate of $6 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks that can process 5,000 purchase orders. Each clerk earns $40,000 per year. There is also a $1 per order processing cost.
If 10,000 units are being produced and the sales price is $500, what is the new sales price if the cost savings are passed on to the consumer?

• A)$129.80
• B)$317.40
• C)$237.00
• D)$337.20

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Definitions:

Unconditioned Response

A natural, automatic reaction to a stimulus that occurs without prior learning or conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, is able to elicit a conditioned response on its own.

Conditioned Response

A learned reaction to a conditioned stimulus that occurs because of previous conditioning.

Irrational Beliefs

Thoughts that are not based on reality or logic, often leading to negative emotional outcomes or unhealthy behaviors.