Question

a firm has redesigned its production process so that it now takes 9 hours for a unit to be made. using the old process, it took 13 hours to make a unit. the process makes one unit each hour, on average, and each unit is worth $1,500. what is the reduction in work-in-process value?

Answer 1

The reduction in work-in-process value after the firm's process redesign is $6,000 per unit, as it now takes 4 hours less (13 hours - 9 hours) at a unit rate of $1,500 to make one unit.

Step-by-step explanation:

The reduction in work-in-process value can be calculated by finding the difference in production time between the old and new processes and multiplying it by the value of each unit.

Old process time: 13 hours

New process time: 9 hours

Difference in time: 13 - 9 = 4 hours

The reduction in work-in-process value = Difference in time x Value per unit = 4 hours x $1,500 = $6,000