AP 2.1 (30 minutes) Super Sashimi produces large, standardised, sushi plates for corporate functions and parties. The plates sell for $40. Orders for sushi plates are placed prior to the upcoming month. Monthly production data and total costs for the business are outlined below. Month Jan Production 1250 Total Costs 42,500 Feb 1600 48,800 Mar 2900 82,600 Apr 1850 53,300 May 3500 95,800 Jun 1300 41,300 Jul 2750 69,500 Aug 3000 96,000 Sep 3350 91,000 Oct 1650 49,700 Nov 2300 61,400 Dec 3100 93,500 Super Sashimi can produce up to 2800 plates a month with their regular facilities. However, they can expand capacity for an upcoming month to up to 4000 plates. To do this they incur an additional rent payment of $10,000, as well as additional direct labour costs. Requirements 1) Calculate the additional DL cost per unit that is incurred if Super Sashimi increases capacity to 4000 plates. (Review Lecture Demonstration Question 2 to help you complete this requirement). Range 1 Variable Cost Range 2 Variable Cost Change in VC Cost (High) Cost (Low) Activity (High) Activity (Low) Cost (High) Cost (Low) Activity (High) Activity (Low) 2) For the upcoming month, Super Sashimi has orders of 3200 plates. From a financial perspective, is it worthwhile to expand capacity? (Hint: Compare profit to orders of 2800 plates) What assumptions have you made in this analysis about variable costs? Fixed costs - range 1 Fixed costs - range 2 Revenues Variable costs Contribution margin Fixed costs Net Profit Is it worthwhile for Super Sashima to expand? What assumptions have been made about variable costs? For 2800 Plates For 3200 Plates