Based on the projections in Exhibits 1- 4 for the total resource utilization of the WLRM and the BB products on their preexisting equipment, TRIM Inc. management is still trying to determine if the new exercise equipment should be produced.

Exhibit 1

Existing Cost Structure and Capacity Provided and Used and the Needs of the New Product, the WLRM Current cost, cost drivers and utilization of resources by Taylor's Reduction Improvement Machines Inc. for production of the current product lines, (without the WLRM) are as follows:

Exhibit 1

steps	Activity Cost	Cost Driver	Practical Capacity of Resources	Capacity Used
Handing Material	200,000	# of moves	12,500	10,000
Setting Up Equipment	12,000,000	setup hours	12,000	10,000
Designing Processes and Products	180,000	types of products	12	8
Designing Packeting	240,000	types of products	12	8
Machining the Product	360,000	machine hours	300,000	240,000
Direct Labor	600,000	direct labor	20,000	18.500

Exhibit 2 The Composition of Each Activity

Activity Detail	Material Handing	Setting Up Equipment	Designing Processes and Products	Designing Packeting	Machining the Product	Direct Labor
Number of Employees	3	6	3	2		10
Annual Salary of Employees	174000	840000	210000	130000
Forklifts	2
Depreciation on Forklifts	16000
Machines					40
Depreciation on Machines					26,000
Maintainence and Supplies	10,000
Tools and Dyes(expensed each year)		360,000
Software cost, utilities, hardware			30,000	50,000
Total Cost of the Activity	200,000	1,200,000	180,000	240,000	360,000	600,000

Maintenance Details (Exhibit 2)

Employees	2
Annual Salaries and Fringe	45,000	90,000
Supplies		20,000
Total Cost of Maintenance		110,000

Exhibit 3 Projected needs of the New Products

Product	Cost Driver	WLRM	WLRM	BB
Volume in Units		7,500	10,000	20,000
Handing Material	# of moves	938	1250	500
Setting Up Equipment	setup hours	1,875	2,500	1,000
Designing Processes and Products	types of products	1	1	1
Designing Packaging	types of products	1	1	1
Machining the Product	machine hours	26,250	35,000	30,000
Direct Labor	direct labor hours	1,500	2,000	4,000
Handing Material	units per move	8.0	8.0	40.0
Setting up Equipment	hours per move	2.0	2.0	2.0
Designing Processes and Products	per product line	1.0	1.0	1.0
Designing Packaging	per product line	1.0	1.0	1.0
Machining the Product	Machine Hours per unit	3.5	3.5	1.5
Direct Labor	Direct Labor hours per unit	0.2	0.2	0.2
Material cost	per unit	$60.00	$60.00	$15.00
Labor Cost	per hour	$30.00	$30.00	$30.00
Sales Price	per unit	$100.00	$100.00	$50.00

Exhibit 4 Detail on the Cost of Purchasing New Capacity

Activity	Cost Driver	Capacity for Next Step	Cost for Next Step
Handling Material	# of moves	$5,000	$40,000
Setting up Equipment	setup hours	1,500	$200,000
Designing Processes and Products	types of products	6	$90,000
Designing Packaging	types of products	6	$125,000
Machining the Product	machine hours	16,000	$25,000
Direct Labor	direct labor hours	2,000	$60,000

Determine what TRIM should do. Should they:

a. Make 7,500 WLRMs?

b. Make 10,000 WLRMs?

c. Make 20,000 BBs?

d. Make the full demand for both the Bicep Builder (20,000 units) and the Waist Line Reduction Machine (10,000 units).

e. Build the full demand for the Bicep Builder (20,000 units) and the original lower volume for the Waist Line Reduction Machine (7,500 units).

f. Make some combination of the volumes of the WLRM and the BB based on a profit maximizing methodology. Double check the optimal solution with Linear Programming.

g. For each alternative include the impact on TRIM's profit. Rank the alternatives and indicate your choice. Be sure to explain the rationale behind your choice.