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 chain (Sell or process further, Chapter 6, 10 marks) 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 chain (Sell or process further, Chapter 6, 10 marks)
