A Work Part Costing 80 Is Processed Through The Factory

A work part costing $80 is processed through the factory. The manufacturing lead time for the part is 12 weeks, and the total time spent in processing during the lead time is 30 hours for all operations at a rate of $35 per hour. Noncooperation costs total $70 during the lead time. The holding cost rate used by the company for work-in-process is 26%. The plant operates 40 hours per week, 52 weeks per year. If this part is typical of the 200 parts per week processed through the factory, determine the following: (a) the holding cost per part during the manufacturing lead time, (b) the total annual holding costs to the factory. (c) If the manufacturing lead time were to be reduced from 12 weeks to 8 weeks, how much would the total holding costs be reduced on an annual basis?

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