Question: Using the data of Table 8-8, compare the total incremental costs involved in a level production plan, in a plan that follows maximum requirements quite
Using the data of Table 8-8, compare the total incremental costs involved in a level production plan, in a plan that follows maximum requirements quite closely, and in some intermediate plan. Normal plant capacity is 400 units per working day. An additional 20 percent capacity can be obtained through over¬
time but at an additional cost of $10 per unit. Inventory carrying cost is $30 per unit per year. Changes in production level cost $5000 per 10 units. Extra capacity can be obtained by subcontracting certain parts at an extra cost of $15 per unit. Beginning inventory is 600 units, or must be determined for some plans.
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