CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and production levels are as follows:
Building 1 (Desks) | Building 2 (Chairs) | |
Monthly capacity | 400 | 500 |
Monthly production | 400 | 400 |
The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair) sell for $309 each and have a variable cost of $128 each.
Required:
a. Is there a bottleneck at CompDesk in Building 1 or Building 2?
Building 1 | |
Building 2 |
b. CompDesk’s production supervisors state they could increase building 1’s capacity by 100 desks per month by producing desks on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $28 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $20,600 per month.
b-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
|
b-2. Should CompDesk produce desks on the weekend?
Yes | |
No |
c. Independent of the situation in requirement (b), CompDesk could add additional equipment and workers to building 1, which would increase its capacity by 100 desks per month. This would not affect the sales price or variable cost per unit but would increase fixed costs by $15,300 per month.
c-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
|
c-2. Should CompDesk add the additional equipment and workers to building 1?
Yes | |
No |
a) building 1 |
The company will sell a desk only with a chair and can sell 500 desk per month that means also 500 chairs a month and because building 1 monthly capacity is only 400 desks which means 400 chairs & desks could be produced however we can sell 500 desks & chairs thus building 1(desks) is a bottleneck at compdesk. Inc.
b-1
Differential revenue | $30,900 |
(309*100) | |
Differential cost | |
fixed | $20,600 |
(given) | |
variable | $15,600 |
((128+28)*100) | |
net operating profit | ($5,300) |
b2) No, Compdesk inc should not produce the desks as it is resulting in net operating loss(done above) of $5300 |
c-1
Differential revenue | $30,900 |
(309*100) | |
Differential cost | |
fixed | $15,300 |
(given) | |
variable | $12,800 |
(128*100) | |
net operating profit | $2,800 |
c-2) Yes, Compdesk should add equipment and workers to building 1 as it is resulting in net operating profit of $2800. |
CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The...
CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1. and the chair is manufactured in building 2 Monthly capacities and production levels are as follows. Building 1 (Desks) Building 2 (Chairs) Monthly capacity 400 509 Monthly production 400 400 The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair) sell for $315 each and have...
CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and production levels are as follows: Building 1 (Desks) Building 2 (Chairs) Monthly capacity 400 500 Monthly production 400 400 The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair) sell for $279 each and have...
CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and production levels are as follows. The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair) sell for $285 each and have a variable cost of $120 each. Required: a. Is there a bottleneck at CompDesk...
CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and production levels are as follows. Monthly capacity Monthly production Building 1 (Desks) 600 600 Building 2 (Chairs) 750 600 The company will sell a desk only with a chair and can sell 750 desks per month. The units (desk with chair) sell for $300 each and have...
value 20.00 points CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and production levels are as follows: Building 1 (Desks) Building 2 (Chairs) Monthly capacity 400 500 Monthly production 400 400 The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair) sell for $324...
Exercise 4-50 Theory of Constraints (LO 4-5) Comp Desk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1. and the chair is manufactured in building 2. Monthly capacities and production levels are as follows: Building 1 {Desks) Building 2 (Chairs) 400 Monthly capacity Monthly production 500 400 400 The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk...
b. CompDesk's production supervisors state they could increase building 1's capacity by 100 desks per month by producing desks on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $26 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $20,200 per month. b-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a...
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Playful Pens, Inc., makes a single model of a pen. The cartridge for the pen (which contains the ink) is manufactured on one machine. The cartridge holder (which you hold when you use the pen) is manufactured on another machine. Monthly capacities and production levels are as follows: Machine 1 (Cartridge) Machine 2 (Holders) Monthly capacity 1,000,000 800,000 Monthly production 800,000 800,000 The company could sell 1,000,000 pens per month. The units (cartridge inside of holder) sell for $11.20 each...
Oficina Bonita Company manufactures office furniture. An unfinished desk is produced for $35.65 and sold for $65.20. A finished desk can be sold for $75.50. The additional processing cost to complete the finished desk is $6.60. Prepare a differential analysis. Round your answers to two decimal places. Differential Analysis Sell Unfinished (Alternative 1) or Process Further into Finished (Alternative 2) Desks Differential Sell Unfinished Desks (Alternative 1) Process Further into Finished Desks (Alternative 2) Effects (Alternative 2) Revenues per desk...