From 2021-2023, many industries across the world faced a shortage of computer chips. In particular, the...
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From 2021-2023, many industries across the world faced a shortage of computer chips. In particular, the auto industry faced a shortage of key chips needed to manufacture cars. Below is hypothetical information for a car manufacturer, Niyonda. Before the chip shortage, the Niyonda produced and sold 509 sedans, 383 trucks, and 467 SUVs every week. Each vehicle required one specialized computer chip. Now Niyonda only has access to 640 computer chips per week and must decide how many of each product line to produce. Each vehicle requires 1 chip. The United Auto Workers (UAW) union has threatened a major strike if the Niyonda tries to cut labor hours. Niyonda also cannot reduce its fixed overhead. However, materials, variable overhead, and selling expenses are variable in the short term. Below is a segment income statement for Niyonda for last year (before the chip shortage). Use the Theory of Constraints to maximize Niyonda's operating profit. The constraining factor is the number of chips. What will Niyonda's operating profit be? Assume that per-unit revenue and variable costs remain the same and that total fixed costs remain the same. Also, assume that Niyonda can sell a maximum of 509 sedans, 383 trucks, and 467 SUVs every week. Sedans Units produced and sold 509 Trucks 383 SUVs 467 Revenue per unit 28,509 35,800 34,975 Direct materials per unit 4,956 8,284 6,039 Direct labor per unit 1,463 1,657 1,635 VOH per unit 3,061 4,593 4,191 FOH applied per unit 9,972 9,972 9,972 Selling expenses per unit 1,172 1,172 1,172 Indicate an operating profit as a positive number. Indicate an operating loss as a negative number. From 2021-2023, many industries across the world faced a shortage of computer chips. In particular, the auto industry faced a shortage of key chips needed to manufacture cars. Below is hypothetical information for a car manufacturer, Niyonda. Before the chip shortage, the Niyonda produced and sold 509 sedans, 383 trucks, and 467 SUVs every week. Each vehicle required one specialized computer chip. Now Niyonda only has access to 640 computer chips per week and must decide how many of each product line to produce. Each vehicle requires 1 chip. The United Auto Workers (UAW) union has threatened a major strike if the Niyonda tries to cut labor hours. Niyonda also cannot reduce its fixed overhead. However, materials, variable overhead, and selling expenses are variable in the short term. Below is a segment income statement for Niyonda for last year (before the chip shortage). Use the Theory of Constraints to maximize Niyonda's operating profit. The constraining factor is the number of chips. What will Niyonda's operating profit be? Assume that per-unit revenue and variable costs remain the same and that total fixed costs remain the same. Also, assume that Niyonda can sell a maximum of 509 sedans, 383 trucks, and 467 SUVs every week. Sedans Units produced and sold 509 Trucks 383 SUVs 467 Revenue per unit 28,509 35,800 34,975 Direct materials per unit 4,956 8,284 6,039 Direct labor per unit 1,463 1,657 1,635 VOH per unit 3,061 4,593 4,191 FOH applied per unit 9,972 9,972 9,972 Selling expenses per unit 1,172 1,172 1,172 Indicate an operating profit as a positive number. Indicate an operating loss as a negative number.
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Production Plan to Maximize Operating Profit To maximize operating profit under the chip shortage Ni... View the full answer
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
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