Case Study $3$: Costing and Break$-$even Analysis

i$.$ A local Jamaican shoes company produces two popular brands of dress shoes. The following information is available:

Men's dress shoes Women's dress shoes

Selling price per pair

$$46$

$$36$

Variable cost per pair

$$38$

$$24$

Total fixed costs are $$234,000.$ The company plans to sell $21,000$ pairs of Men's dress shoes and $7,000$ pairs of Women's dress shoes.

Required:

a$)$ Compute the contribution margin for each beverage. $(4$ Marks$)$

b$)$ What is the expected net income? $(4$ Marks$)$

c$)$ Assume the sales mix is $3$ pairs of Men's dress shoes for every $1$ pair of Women's dress shoes; What is the break$-$even point in pairs for each pair of shoes? $(5$ Marks$)$

d$)$ Assume the sales mix is $3$ pairs of Men's dress shoes for every $2$ pairs of Women's dress shoes; What is the break$-$even point in pairs for each pair of shoes? $(5$ Marks$)$

II$.$ The Jamaican shoes company produces three other types of shoe sandals for another company. Sandal A sells for $$60$; its variable costs are $$20.$ Sandal B sells for $$200$; its variable costs are $$120.$ Sandal C sells for $$25$; its variable costs are $$10.$ Last year, the firm sold $1000$ pairs of A$,2000$ pairs of B$,$ and $10,000$ pairs of C$.$ The firm has fixed costs of $$320,000$ per year. Calculate the break$-$even point of the firm. $(7$ marks$)$

Case Study $4$: Productivity

$($I$)$ JACON Limited produces glass bottles for use in a local beverage company. Currently, JACON produces $1600$ cases of bottles per day. The $20$ workers at ALLISON Products work from $7$ a$.$m$.$ until $4$ p$.$m$.,$ with $30$ minutes off for lunch and a $15-$minute break during the morning work session and another at the afternoon work session. JACON is in the competitive packaging industry and needs to increase productivity to stay competitive. They feel that a $20$ percent increase is needed. JACON's management believes that the $20$ percent increase will not be possible without a change in working conditions, so they change work hours. The new schedule calls on workers to work from $7$:$30$ a$.$m$.$ until $4$:$30$

p$.$m$.,$ during which workers can take one hour off at any time of their choosing. Obviously, the number of paid hours is the same as before, but production increases, perhaps because workers are given a bit more control over their workday. After this change, bottle production increased to $1800$ cases of bottles per day.

Required:

a$)$ Calculate labor productivity for the initial situation $[4$marks$]$

b$)$ Calculate labor productivity for the hypothetical $20$ percent increase $[4$ marks$]$

c$)$ What is the productivity after the change in work rules? $[3$ marks$]$

d$)$ Write a short paragraph analyzing these results. $[4$ marks$]$

$($II$)$ MetalCraftJa produces a special type of metal mini$-$chairs, which are used mostly by Basic$/$Infant schools in the parish of St Catherine. Current operations allow the welding assembly to make $550$ mini$-$chairs per day, in two $8-$hour shifts $(275$ mini$-$chairs per shift$).$ MetalCraftJa has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to $325$ mini$-$chairs per shift. Labor costs average $$10$ per hour for each of the $5$ full$-$time workers on each shift. Capital costs were previously $$3,000$ per day, and rose to $$3,200$ per day with the equipment modifications. Energy costs were unchanged by the modifications, at $$400$ per day.

a$)$ What is the firm's multifactor productivity before the changes? $(5$ marks$)$

b$)$ What is the firm's multifactor productivity after the changes? $(5$ marks$)$