Final answer:
The Sandoval Company's engineers have an unused capacity of 750 design changes, which translates to a monetary value of $30,000 based on their individual production capacities and annual salaries.
Step-by-step explanation:
The question asks to calculate the unused capacity in dollars for the Sandoval Company's process engineers.
Since each of the four engineers can process 1,500 design changes, their total capacity is 4 engineers x 1,500 design changes/engineer = 6,000 design changes.
However, last year they only produced 5,250 design changes. The unused capacity in terms of design changes is 6,000 - 5,250 = 750 design changes.
To calculate the unused capacity in dollars, we need to figure out the cost associated with the unused capacity. Each engineer is paid $60,000 annually, which means the cost per design change is $60,000/engineer รท 1,500 design changes/engineer = $40/design change.
The cost of the unused capacity is 750 design changes x $40/design change = $30,000. Therefore, the correct answer is b. $30,000.
To calculate the unused capacity in dollars, we need to find out how many design changes the four engineers were able to process last year.
Each engineer is able to process 1,500 design changes, so the total capacity is 4 * 1,500 = 6,000 design changes. However, only 5,250 design changes were produced last year. So, the unused capacity is equal to the total capacity minus the actual production.
The unused capacity in dollars can be found by multiplying the unused capacity in design changes by the yearly salary of each engineer, which is $60,000. Therefore, the unused capacity in dollars is (6,000 - 5,250) * $60,000 = $45,000.