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East Corp, another division of West Corp, is experiencing capacity issues within its painting department. The department paints three different types of kitchen cabinets which
East Corp, another division of West Corp, is experiencing capacity issues within its painting department. The department paints three different types of kitchen cabinets which differ in demand, price, variable costs, fixed costs allocated by ABC and time minutes in production.
Product A
Product B
Product C
Demand in units
Price
$
$
$
Variable costs
$
$
$
Allocated fixed costs
$
$
$
Operating income
$
$
$
Time in production minutes
Presently demand exceeds capacity. The company has three painting production lines, and each line can produce each of the above products. Set up time to switch from painting one product to another is close to zero. Each of the paint lines operates hours a day for days a year hours All three products go through the same work centres in the same sequence. The President is unsure how to make the most money under the current conditions in the East division.
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