Question 6 To diversity its product line and meet the needs of different customers, Benny wants...

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Question 6 To diversity its product line and meet the needs of different customers, Benny wants to propose two new products for Stylish Chairs, the Ultra-Cool Chair and the Super-Shinny Chair. These new products are the standard chair with padding manufactured by Stylish Chairs with some additional work on them. For the Ultra- Cool Chair, an extra layer of varnish is applied, and for the Super-Shinny Chair, no extra layer of varnish is applied but extra shiny bolts are added. Regarding the Ultra-Cool Chair, adding another layer of varnish takes an additional 2 hours of direct manufacturing activity (varnishing) for each chair; the additional layer of varnish requires 1 litre of fancy varnish for each chair. This fancy varnish is 50% more expensive than the normal varnish used for the standard product. Regarding the Super-Shinny Chair, adding the extra shiny bolts takes an additional 1 hour of assembly for each chair and 10 additional shiny bolts for each chair. These shiny bolts are 200% more expensive than the normal bolts used for the standard product. Considering that a unit of the standard chair with padding is sold by $900 per unit, Benny says the Ultra-Cool Chair could be sold by $1,000 so Stylish Chairs would make more money with this new product. However, Benny is not sure which price would be appropriate for the Super-Shinny Chair. Required You have been asked to crunch the numbers and show whether it is worth processing the standard chair into the Ultra-Cool Chair and selling it for $1,000. Benny also wants to know which is the minimum price Stylish Chairs should charge for a Super-Shinny Chair for it being worth processing further from a standard chair. (Sell or process further, Chapter 6, 10 marks) Question 6 To diversity its product line and meet the needs of different customers, Benny wants to propose two new products for Stylish Chairs, the Ultra-Cool Chair and the Super-Shinny Chair. These new products are the standard chair with padding manufactured by Stylish Chairs with some additional work on them. For the Ultra- Cool Chair, an extra layer of varnish is applied, and for the Super-Shinny Chair, no extra layer of varnish is applied but extra shiny bolts are added. Regarding the Ultra-Cool Chair, adding another layer of varnish takes an additional 2 hours of direct manufacturing activity (varnishing) for each chair; the additional layer of varnish requires 1 litre of fancy varnish for each chair. This fancy varnish is 50% more expensive than the normal varnish used for the standard product. Regarding the Super-Shinny Chair, adding the extra shiny bolts takes an additional 1 hour of assembly for each chair and 10 additional shiny bolts for each chair. These shiny bolts are 200% more expensive than the normal bolts used for the standard product. Considering that a unit of the standard chair with padding is sold by $900 per unit, Benny says the Ultra-Cool Chair could be sold by $1,000 so Stylish Chairs would make more money with this new product. However, Benny is not sure which price would be appropriate for the Super-Shinny Chair. Required You have been asked to crunch the numbers and show whether it is worth processing the standard chair into the Ultra-Cool Chair and selling it for $1,000. Benny also wants to know which is the minimum price Stylish Chairs should charge for a Super-Shinny Chair for it being worth processing further from a standard chair. (Sell or process further, Chapter 6, 10 marks)