What is the cost to inspect each unit

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Reference no: EM13252119

A company currently using an unspection process in its material receiving department is trying to install an overall cost reduction program. One possible reduction is the elimination of one inspection position. This position tests material that has a defective content on th average of .07. By inspecting all items, the inspector is able to remove all defects. The inspector can inspect 49 units per hour. The hourly rate including fringe benefits for this position is $9. If the inspection position is eliminated, defects will go into product assembly and will have to be replaced later at a cost of $12 each when they are detected in final product testing. A) What is the cost to inspect each unit? B) Is there benefit (or loss) from the current inspection process? How much?, Hourly, and Per Unit? C) Based on the above parts, what is your conclusion?

Reference no: EM13252119

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