Tahiti Manufacturing Recently Purchased a New Machine

question 2

Short Answer

Tahiti Manufacturing recently purchased a new machine. The maintenance contractor recommended that this model should receive maintenance every 3,000- 6,000 hours of operation. If each maintenance check costs $220 and the machine is expected to provide 30,000 hours of service, what is the total savings of scheduling maintenance every 6,000 hours over 3,000 hours?

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Definitions:

Variable Costs Per Unit

The costs that vary directly in proportion to changes in the level of production or sales volume.

Activity

A task, action, or operation performed in a business or industrial context, often contributing to a larger set of operations.

Committed Fixed Costs

Expenses that a company has an obligation to pay, regardless of the level of production or sales activity, such as rent, insurance, and salaries.

One-Year

A period of time consisting of 12 consecutive months.