Palmateer Industries Makes an Electronic Component in Two Departments, Machining

question 101

Essay

Palmateer Industries makes an electronic component in two departments, Machining and Assembly.The capacity per month is 30,000 units in the Machining Department and 20,000 in the Assembly Department.The only variable cost of the product is the direct material of $100 per unit.All direct material cost is incurred in the Machining Department.All other costs of operating the two departments are fixed costs.Palmateer can sell as many units of this electronic component as it produces at a selling price of $300 per unit.Required:
Assuming any defective unites produced in either department must be scrapped:
a.Compute the loss that occurs if a defective unit is produced in the Machining Department.
b.Compute the loss that occurs if a defective unit is produced in the Assembly Department.
c.How do your answers in parts (a)and (b)relate to the theory of constraints? Explain.

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Definitions:

Withdrawal

The act of reducing or eliminating the use of a substance after prolonged or excessive use, often leading to uncomfortable physical or psychological symptoms.

Dependence

a state in which an organism requires a substance to function normally, which can lead to physical or psychological addiction.

Conscious Experience

The subjective awareness of one's thoughts, feelings, and perceptions in the present moment.

Early-20th-century Psychologists

Psychologists from the period of the 1900s to 1920, who contributed foundational theories and research methodologies to the field of psychology.