Question

C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows:
Activity
Processing time per customer
Wage rate
($ Per hour)
Greet customer
2 seconds
5
Take order
30 seconds
5
Process order
60 seconds
15
Deliver order
5 seconds
8

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the cost of direct labor in $ per customer？

A.0.275
B.0.3125
C.0.40
D.
0.50

Answer 1

Answer:

B.0.3125

Explanation:

The computation of the cost of direct labor in $ per customer is shown below:

= Total employee cost ÷ take order time

where,

Total employee cost equal to

= Each employee wages rate per hour × number of employees

= $7.5 × 5

= $37.5

And, the take order time is

= 30 × 4 employees

= 120

So, the cost of direct labor per customer is

= $37.5 ÷ 120

= 0.3125