Form no: IQAC /10 (a)

PROGRAM:
BACHELOR OF BUSINESS ADMINISTRATION

Subject PRODUCTION AND OPERATION MANAGEMENT

Subject Code BBA 403

Semester/Year 4th Semester
Section A

Project No. 1

Project title SHORT ANSWER QUESTIONS

COs Covered CO1, CO2

Student’s Name DAVID SHARMA

Students Enroll. No. ASB/BBA/21/015

Student’s Signature* david

Submission Date 05.05.23

Due Date 06.05.23
Faculty Name Prof. Soma Das
Marks Assigned by the
Faculty

Signature

Comments by the Faculty:

*By signing above, you attest that you have contributed to this submission and confirm
that all work you have contributed to this submission is your own work. Any suspicion
of copying or plagiarism in this work will result in an investigation of Academic
Misconduct and may result in a “0” on the work, or possibly more severe penalties, as
well as a Disciplinary Notice on your academic record.
 Form no: IQAC /10 (a)

1. Machines A and B are both capable of manufacturing a product. They compare as follows: -

Machine A Machine B
Investment Rs. 50,000 Rs. 80,000
Interest on capital 15% per annum 15% per annum
invested
Hourly charges Rs. 10 Rs. 8
(wages+power)
No. of pieces produced 5 8
per hour
Annual operating hours 2000 2000

(i) Which machine will have the lower cost per unit of output, if run for the whole year?

Machine A Machine B
Annual interest charges 50,000 × (15/100) = 7,500 80,000× (15/100) = 12,000

Annual operating charges 10×2,000 = 20, 000 8×2,000= 16,000

Total annual charges 7,500+20,000 = 27,500 12,000+16,000= 28,000
Annual production (units) for2,000 5×2,000 =10,000 nos. 8× 2000=16,000 nos.
hours
Cost per unit = 2. 75 = 1.75

Machine “B” gives the lower cost per unit if run for the whole year (for 2000 hours).

(ii) If only 4000 pieces are to be produced in a year, which machine would have the lower cost per
piece?

Machine A Machine B
Operating hours required for producing4000 4000/5 = 800 hrs. 4000/8 = 500 hrs.
nos.
Operating charges 10 x 800 = 8, 000 8 x 500 = 4,000
Interest charges 7,500 12,000
Total annual charges 8000 + 7,500 = 15,500 4000 + 12,000= 16,000

Cost per unit = 19.375 = 32

Machine “A” gives lower cost per unit.

 Form no: IQAC /10 (a)

2. Methods P and Q are both capable of manufacturing a product. They compare as follows:

Data Method P Method Q

Fixture-------- Cost 24, 000 rupees 16,000 rupees
Fixture--------- Life 6 months 4 months
Tooling-------- Cost 2,560 rupees 4,800 rupees
Tooling--------- Life 300 pieces 500 pieces
Processing time per piece 6 minutes 4 minutes

The annual requirement is 1500 nos. Operating cost per hour of the process is Rs. 128 for bothprocesses.
Material cost is same in each case.

Which method would you choose for production during a period of one year?

Data Method P Method Q

Cost of manufacture per year:
Fixture cost 24,000 × 2 = 48,000 16,000 × 3 = 48,000
(2 nos of fixtures are required per year in method P and 3 nos required in method Q)
Tooling cost 2,560 × 1,500 /300 = 2,560 × 5 = 4,800 × 1500/ 500 = 4800 × 3 =
12,800 14,400

Operating hours to produce 1,500nos. 1,500 × 6/60 =150 hrs. 1,500 × 4/60 =100 hrs.

Operating cost per year 128 × 150 = 19,200 128 × 100 = 12,800
Total manufacturing cost per year 48,000 + 12,800 + 19,200 = 80,000 48,000 + 14,400 + 12,800 = 75,200

Since method ‘Q’ is cheaper than method ‘P’, method ‘Q’ is the choice for production during
the whole one-year period.
Form no: IQAC /10 (a)