Posted: November 16th, 2021
2. (20 points) Manufacturer XYZ has two production divisions, Processing (P) and Assembly
(A). The company has three service departments, facility management (FM), receiving and
handling (RH), and human resource (HR). Work at Processing heavily relies on labor force.
Its costs depend primarily on the direct-labor hours. On the other hand, work at Assembly is
highly automated and its costs can be mainly determined by the number of components used
in each product. The costs of facility management depend primarily on the space used. The
costs of receiving and handling depend primarily on the number of components handled. The
costs of human resource depend primarily on the labor hours.
Two products, Pp1 and Pp2, are produced at Processing. Another two products, Pa1 and Pa2, are
produced at Assembly. The material costs, number of components and labor hours used are
listed in the table below.
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