(B) Your printed circuit factory has two different wave...

(B) Your printed circuit factory has two different wave soldering machines that can make a custom circuit board for an important customer. Machine A makes 105 boards per hour in an 18-hour production day. Raw material costs $8 per board, and there is no scrap of any boards during production. The variable overhead rate to use Machine A is $275 per hour. The boards are sold for a price of $40 each. Machine B makes 130 boards per hour in an 18-hour production day. Raw material costs $5 per board, but 10% of all boards are scrapped during production, and cannot be sold. The variable overhead rate to use Machine B is $160 per hour. The boards are sold for a price of $40 each. Which machine is more profitable to run per day, and by how much? Answer Box:

Transcript

00:01 Hello students, in this question we have to find which machine is more profitable to run per day and by how much.

00:05 So, first let us consider the case of machine a.

00:09 For machine a, the total production is total production is equal to the production rate production rate into production hour production hour and this is equal to 105 boats per hour.

00:25 So, 105 into 18 and thus this is equal to 1890 boats.

00:30 Now, the total raw material cost total raw material cost the total raw cost is equal to total production the total production into the raw material cost per boat the cost per boat therefore this is 1890 into the cost per boat is given as eight dollars per boat therefore this is equal to 15 ,120 dollars 15 ,120 dollars.

01:01 Now, for machine b for the machine b total production total production is equal to the production rate production rate into production hours and this is equal to 130 boats into 18 hours and this is equal to 2340 boats.

01:21 This is a total number of boats.

01:22 Now, the total raw material cost total raw material cost is equal to the total production into the raw material cost per boat raw material cost per boat which is now substituting the values given in the question this is 2340 into the cost per material the cost per boat is 2000 is five dollars per boat so multiplying we get this is equal to dollars 11 ,700.

01:53 Now, for machine a machine a the total variable overhead overhead cost will be total variable overhead cost is equal to the variable overhead rate variable overhead rate into the production hours and this is equal to dollars 275 per hour into 18 hours this is equal to dollars 2880 sorry this is equal to dollars 4950.

02:33 Now, the total variable total variable overhead cost for machine b this is equal to the variable overhead rate into the production hours so the machine b the variable overhead rate is equal to 160 dollars per hour 160 dollars per hour into the 18 hours and this is equal to two thousand two thousand eight hundred eighty dollars...

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