Solved: Tokuga Company makes printed circuit boards in a

suburb of
Tokuga Company makes printed circuit boards in a suburb of

Tokuga Company makes printed circuit boards in a suburb of Tokyo. The production process is
auto-mated with computer-controlled robotic machines assembling each circuit board from a
supply of parts and then soldering the parts to the board. Materials-handling and quality-
assurance activities use a combination of labor and equipment. Although a few resources that
are used are variable with respect to changes in the demand of boards, these costs are not
material compared to the fixed-cost resources that are used.
Tokuga makes three types of circuit boards, models 1, 2, and 3. Steps 1 and 2 of the design
process for an ABC system have been completed. Exhibit 12-23 shows the process-based map
of Tokuga’s operations.

1. Compute the cost of production for each of the three types of circuit boards and the cost per
circuit board for each type.
2. What if the design of model 1 could be simplified so that it required only 8 distinct parts
(instead of 20) and took only 3 minutes of testing time (instead of five). Compute the cost of
model 1 circuit boards and the cost per circuit board. Will the costs per circuit board for models
2 and 3 change? You do not need to compute the costs per circuit board for models 2 and 3,
only note whether the costs will increase, decrease, remain unchanged, or cannot be
determined.Explain.

Tokuga Company makes printed circuit boards in a suburb of

ANSWER
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