Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

not an accounting question sorry. its an operations managment question The senior management at Davis Watercraft would like to determine if it is possible to

image text in transcribednot an accounting question sorry. its an operations managment question

The senior management at Davis Watercraft would like to determine if it is possible to improve firm profitability by changing their existing product mix. Currently, the product mix is determined by giving resource priority to the highest contribution margin watercrafts. Davis Watercraft always has a contingent of 10 workers on hand; each worker is paid $20 per hour. Overhead costs are $50,000 per week. The plant operates 18 hours per day and 6 days per week. Labor is considered a fixed expense because workers are paid for their time regardless of their utilization. The production manager has determined that workstation 1 is the bottleneck. Detailed production information is provided below. A Price Material costs Weekly demand Processing Time Station 1 Processing Time Station 2 Processing Time Station 3 Processing Time Station 4 $455 $55 120 48 Model B $355 $45 90 0 $470 $120 48 24 48 0 32 0 0 8 16 48 24 a. Using the traditional method, which bases decisions solely on a product's contribution to profits and overhead, what is the product mix that yields the highest total profit? (Enter your responses rounded to the nearest whole number.) A B C Product mix 120 90 30 The total profit under the traditional method is $ 14,800". (Enter your response rounded to the nearest whole number.) b. Using the bottleneck-based method, what is the product mix that yields the highest total profit? (Round your answers to the nearest whole number and ignore the violations on constraints due to rounding.) A B Product mix The senior management at Davis Watercraft would like to determine if it is possible to improve firm profitability by changing their existing product mix. Currently, the product mix is determined by giving resource priority to the highest contribution margin watercrafts. Davis Watercraft always has a contingent of 10 workers on hand; each worker is paid $20 per hour. Overhead costs are $50,000 per week. The plant operates 18 hours per day and 6 days per week. Labor is considered a fixed expense because workers are paid for their time regardless of their utilization. The production manager has determined that workstation 1 is the bottleneck. Detailed production information is provided below. A Price Material costs Weekly demand Processing Time Station 1 Processing Time Station 2 Processing Time Station 3 Processing Time Station 4 $455 $55 120 48 Model B $355 $45 90 0 $470 $120 48 24 48 0 32 0 0 8 16 48 24 a. Using the traditional method, which bases decisions solely on a product's contribution to profits and overhead, what is the product mix that yields the highest total profit? (Enter your responses rounded to the nearest whole number.) A B C Product mix 120 90 30 The total profit under the traditional method is $ 14,800". (Enter your response rounded to the nearest whole number.) b. Using the bottleneck-based method, what is the product mix that yields the highest total profit? (Round your answers to the nearest whole number and ignore the violations on constraints due to rounding.) A B Product mix

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions