Question

White Tiger Electronics produces CD players using an automated assembly line process. The standard cost of CD players is ​$161161 per unit​ (labor, ​$3434​; ​materials, ​$7474​; and​ overhead, ​$5353​). The sales price is ​$300300 per unit. a. To achieve a 1414 percent multifactor productivity improvement by reducing materials costs​ only, one needs to reduce the materials cost by nothing percent. ​(Enter your response as a percent rounded to two decimal​ places.)

Answer 1

Answer: 26.37%

Step-by-step explanation:

Given that,

Standard cost of CD players = ​$161 per unit

Labor = ​$34

Materials = ​$74

Overhead = ​$53

Sales price = ​$300 per unit

Current multi-factor productivity =
`(Sales\ price)/(standard\ cost\ of\ CD\ players)`

=
`(300)/(161)`

= 1.86

Revised multi-factor productivity after productivity increase by 14 % = 2.1204

Thus given sales price remaining constant at $ 300 and multi-factor productivity of 2.1204

Revised standard cost of CD players =
`(300)/(2.1204)`

= $141.48

Let the corresponding material cost be $m,

Therefore,

Labor cost + m + overhead cost = $141.48

$34 + m + $53 = $141.48

m = $54.48

percentage reduction in material cost =
`(Initial\ cost - Revised\ material\ cost)/(initial\ cost)*100`

=
`(74 - 54.48)/(74)*100`

= 26.37%

MATERIAL COST MUST REDUCE BY 26.37%.