A company has the following demand forecast next year, expressed in six bimonthly (2-month) periods in this table The following costing data have been obtained Each employee woiks 160 regular working hours per month Each unit requires 20 standard hours to produce The labour costs are $6 per normal hour and S9 per overtime hour It costs S3 per month to hold an item in inventory Use the following rules in rounding off the number of employees If the decimal is 0.5 or more, round up. e.g. round 32.6 to 37 If the decimal is less than 0.5. round down if the number of employees is decreasing, i.e. lower than the previous period. If the decimal is less than 0.5. round up if the number of employees is increasing, i.e. higher than the previous period Question 3 The company wants to determine the cost of meeting the demand by using a mixed strategy which involves changes in the number of employees and the use of overtime work. To keep from adding too many temporary employees during the peak demand period, the company will use overtime equal to up to 25 percent of the regular-time hours available. The company has 22 employees at the end of the current year (i.e. at the beginning of period 1 of the following year which is being planned), and wants to end period 6 o f the planning year with the same number of employees, i.e. 22 employees. It costs $400 to hire and $500 to lay off an employee. The company begins the planning year with no inventory. If at least 50% of a new employee's regular-time capacity could be utilized during the current period as well as the next period, it will add an employee, otherwise overtime will be used. The company will continue to add employees as required until the maximum employment level as dictated by the constraint of using overtime subject to a maximum of 25 percent of regular-time hours during the peak period, i.e. period 5. Once the maximum employment level is reached, overtime will be used and no more employees are added. Find the employment level for each bimonthly period. Find the total payroll-related costs for the year. W hat cost per unit results from these payroll-related costs? (Ans. S126 per unit) A company has the following demand forecast next year, expressed in six bimonthly (2-month) periods in this table The following costing data have been obtained Each employee woiks 160 regular working hours per month Each unit requires 20 standard hours to produce The labour costs are $6 per normal hour and S9 per overtime hour It costs S3 per month to hold an item in inventory Use the following rules in rounding off the number of employees If the decimal is 0.5 or more, round up. e.g. round 32.6 to 37 If the decimal is less than 0.5. round down if the number of employees is decreasing, i.e. lower than the previous period. If the decimal is less than 0.5. round up if the number of employees is increasing, i.e. higher than the previous period Question 3 The company wants to determine the cost of meeting the demand by using a mixed strategy which involves changes in the number of employees and the use of overtime work. To keep from adding too many temporary employees during the peak demand period, the company will use overtime equal to up to 25 percent of the regular-time hours available. The company has 22 employees at the end of the current year (i.e. at the beginning of period 1 of the following year which is being planned), and wants to end period 6 o f the planning year with the same number of employees, i.e. 22 employees. It costs $400 to hire and $500 to lay off an employee. The company begins the planning year with no inventory. If at least 50% of a new employee's regular-time capacity could be utilized during the current period as well as the next period, it will add an employee, otherwise overtime will be used. The company will continue to add employees as required until the maximum employment level as dictated by the constraint of using overtime subject to a maximum of 25 percent of regular-time hours during the peak period, i.e. period 5. Once the maximum employment level is reached, overtime will be used and no more employees are added. Find the employment level for each bimonthly period. Find the total payroll-related costs for the year. W hat cost per unit results from these payroll-related costs? (Ans. S126 per unit)
