1. Calculate the cost of the five orders in Exhibit 4 under the
traditional and PROKASTA systems. Hint: first calculate the
PROKASTA cost of processing an order and handling a special
component.
Traditional System
Order A B C D E
Base Motor Cost 247 247247247247
Special Component Cost 32.2 64.4 96.6 161322
Total Materials & MFG Costs279.2 311.4 343.6 408569
Support Related OH (35%) 97.72 108.99 120.26 142.8 199.15
Total 377420464551768
Cost of Processing and Handling: PROKASTA
Cost (000) Amount Rate
Special Components 19,500 325,000 60
Order Processing 13,800 65,625 210.29
PROKASTA System
Order A B C D E
Base Motor Cost 304304304304304
Special Motor Costs 39.6 79.2 118.8 198396
Special Component Handling 60 120180300600
Order Processing Costs 210.29 210.29 210.29 210.29 210.29
Total 613.89 713.49 813.09 1,012 1,510
2. Calculate traditional and PROKASTA unit costs if 1 unit, 10 units,
20 units, or 100 units are ordered. Graph the product costs
against volume ordered and explain how the graph can help
support Siemens’s strategy.
Traditional System:
Order A B C D E
1 376.92 420.39 463.86 550.80 768.15
10 3,769.20 4,203.90 4,638.60 5,508.00 7,681.50
20 7538.40 8,407.80 9,277.20 11,016.00 15,363.00
100 37,692.00 42,039.00 46,386.00 55,080.00 76,815.00
Siemens Electric Motor Works (A) Questions
