Question
The Janders Company markets various business and engineering products. Currently, Janders is preparing to introduce two new calculators: one for the business market called the
The Janders Company markets various business and engineering products. Currently, Janders is preparing to introduce two new calculators: one for the business market called the Financial Manager and one for the engineering market called the Technician. Each calculator has three components: a base, an electronic cartridge, and a face plate or top. The same base is used for both calculators, but the cartridges and tops are different. All components can be manufactured by the company or purchased from outside suppliers. The manufacturing costs and purchase prices for the components and manufacturing times in minutes) for the components are summarized in Table 1.
Janders' forecasters indicate that 3000 Financial Manager calculators and 2000-Technician calculators will be needed. However, manufacturing capacity is limited. The company has 200 hours of regular manufacturing time and 50 hours of overtime that can be scheduled for the calculators. Overtime involves a premium at the additional cost of $9 per hour.
Table 1 MANUFACTURING COSTS AND PURCHASE PRICES FOR JANDERS' CALCULATOR COMPONENTS
Cost Per Unit
Component
Manufacture (Regular Time)
Purchase
Manufacturing Time (minutes)
Base
$0.50
$0.60
1.0
Financial cartridge
3.75
4.00
3.0
Technician cartridge
3.30
3.90
2.5
Financial top
0.60
0.65
1.0
Technician top
0.75
0.78
1.5
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