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Book Keeper

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Submitted By ernnessa2012
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Pages 6
JAMIE KINCADE

Jamie Kincade was supervisor of an assembly department in Chelsea Electronics Company. In recent weeks, Kincade had become convinced that a certain component, number J-42 could be produced more efficiently if certain changes were made in assembly methods. Kincade had described this proposal to the company’s industrial engineer, but the engineer had quickly dismissed Kincade’s ideas-mainly. Kincade thought, because the engineer had not thought of them first.

Kincade had frequently thought of starting a business and felt that the ability to produce the J-42 component at a lower cost might provide this opportunity. Chelsea’s purchasing agent assured Kincade that Chelsea would be willing to buy J-42s from KIncade if the price were 10-15% below Chelsea’s current cost of $2.97 per unit. Working at home, Kincade experimented with the new methods, which were based on the use of a new fixture to aid in assembling each J-42. This experimentation seemed successful, so Kincade proceeded to prepare some estimates for large-scale J-42 production. Kincade determined the following :

1. A local toolmaker would make the new fixtures for a price of $900 each. One fixture would be needed for each assembly worker

2. Assembly workers were readily available, on either a full time or part time basis, at a wage of $6,75 per hour. Kincade felt that another 20% of wages would be necessary for fringe benefits. Kincade estimated that on the average (including rest breaks), a worker could assemble, test, and pack 15 units of the J-42 per hour

3. Purchased components fort the J-42 should cost about $1.53 per nit over the next year. Shipping supplies and delivery costs would amount to approximately $0.09 per unit

4. Suitable space was available for assembly operations at a rental of $1,080 per month. A 12-moth lease was required

5. Assembly tables,

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