A Nedu dloud Draw Case Study 2 Deciding where to produce. (CMA, adapted) Central trmica, Inc., produces the same power generator in two Spanish plants, a new plant in Los Barrios and an older plant in Asc. The following data are available for the two plants. Home Insert Formula Page Layout 1 2 Selling price 3 Variable manufacturing cost per unit 4 Fixed manufacturing cost per unit 5 Variable marketing cost per unit 6 Fixed marketing cost per unit 7 Total cost per unit 8 Operating income per unit 9 Production rate per day 110) Normal anual capacity usage 11 Maximum annual capacity Data Review VIEW B D Los Barrios Asc $200.00 $200.00 $80.00 $85.00 35.00 27,00 20.00 25,00 30.00 24.00 165.00 161.00 $ 35.00 $39.00 500 units 400 units 240 days 240 days 300 days 300 days All fixed costs per unit are calculated based on a normal capacity usage consisting of 240 working days. When the number of working days exceeds 240, overtime charges raise the variable manufacturing costs of additional units by $5.00 per unit in Los Barrios and $10.00 per unit in Asc. Central trmica, Inc. is expected to produce and sell 240,000 power generators during the coming year. Wanting to take advantage of the higher operating income per unit at Asc, the company's production manager has decided to manufacture 120,000 units at each plant, resulting in a plan in which Asch operates at maximum capacity (400 units per day ~ 300 days) and Los Barrios operates at its normal volume (500 units per day ~ 240 days). Required: 1. Calculate the breakeven point in units for the Los Barrios plant and for the Asc plant. 2. Calculate the operating income that would result from the production manager's plan to produce 120.000 units at each plant. 3. Determine how the production of 240.000 units should be allocated between the Los Barrios and Asc plants to maximize operating income for Central trmica. Inc. Show your calculations. BTU ---A- Merge & Center - s 69 2. De For Clipboard Conditional Format Cell Formatting - Table Styles Shles Font Alignment Number 5 14 CE H ASCO Los Barrios 240 500 5.00 240 400 $10.00 $ $200.00 $80.00 0 20 $200.00 $85.00 0 25 110 100 1 2 Normal Capacity (Days) 3 Number of units per day 4 Variable Cost increase in Overtime 5 6 Selling price 7 Variable cost per unit 8 Manufacturing 9 Marketing and distribution 10 Contribution margin per unit (CMU) 11 Fixed costs per unit 12 Manufacturing 13 Marketing and distribution 14 Operating income per unit 15 16 17 CMU of normal production 18 CMU of overtime production 19 20 21 35 30 27 24 65 51 BIU a-A- 29 Wrap Text Merge & Center General $ -% 91 Clipboard Font Alignment Conditional Formats Cell Formatting - Table Styles Styles Number 14 F Los Barrios 22 23 Requirement 1 24 Annual fixed costs 25 26 Breakeven volume Asc units units 28 Requirement 2 29 Units produced and sold 30 Normal annual volume (units) 120,000 120,000 32 Units over normal volume (needing overtime) CM from normal production units (normal annual volume 34 CM from overtime production units 35 36 Total contribution margin 37 Total fixed costs 28 Operating income 39 Total operating income 40 41 Requirement 3 Results Case study Case study 2 Type here to search o General BTU -A- Merge Center - $ -% -3 Clipboard 5 Font Alignment Conditional Formatas Ce Formatting - Table Style Styles Number 14 D E F G 39 Total operating income 40 41 Requirement 3 Units produced and sold to Maximise Operating Income 42 13 Normal annual volume (units) 44 45 Units over normal volume (needing overtime) 26 CM from normal production units (normal annual volume 7 CM from overtime production units 18 #9 Total contribution margin 50 Total fixed costs 1 Operating income 52 Total operating income 63 54 Total marks in the above formulas - 38+2 mare for the explanation of the calculation below = 40 marks in total 65 16 Explanation of the calculation for Requirement 3 above: 7 8 Results Case study Case study 2 Type here to search O