Question

Simon, Inc., has five fitters, each of whom can assemble 2,000 machines in a year. Each fitter is paid $24,000 per year. Calculate the activity rate per assembly.

1) $18 per machine
2) $12 per machine
3) $15 per machine
4) $10 per machine

Answer 1

The activity rate per assembly for Simon, Inc. is calculated by dividing the total labor cost by the number of machines assembled. With five fitters assembling a total of 10,000 machines and total labor costs of $120,000, the activity rate is $12 per machine.

Step-by-step explanation:

To calculate the activity rate per assembly, we need to determine how much it costs to produce each machine. Since each fitter can assemble 2,000 machines in a year and there are five fitters, the total number of machines assembled is 2,000 machines × 5 fitters = 10,000 machines.

Next, we need to calculate the total labor costs which would be 5 fitters × $24,000 per fitter = $120,000 per year for all fitters. Now, we divide the total labor cost by the number of machines to find the activity rate per assembly.

$120,000 ÷ 10,000 machines = $12 per machine.

Therefore, the correct answer is (2) $12 per machine, which is the activity rate for assembling each machine.