Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data: Annualized Fixed Cost of Plant & EquipmentVariable Costs (per unit) ($)Process TypeLaborMaterialEnergyMass Customization$1,260,000301812Intermittent$1,000,000242620Repetitive$1,600,000281512Continuous$1,960,000251510 Metters Cabinets projects an annual demand of 24,000 units for the Maxistand. The selling price for the Maxistand is $120 per unit.a) Based on the projected annual demand, the best alternative available is to use the Intermittent process.b) The value of annual profit using this method is$_____.

Given that: Volume of output (Q) = 24000 units Per unit selling price(SP) = $120

Answered: etters Cabinets, Inc., needs to choose…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data:

	Annualized Fixed Cost of Plant & Equipment	Variable Costs (per unit) ($)
Process Type	Labor	Material	Energy
Mass Customization	$1,260,000	30	18	12
Intermittent	$1,000,000	24	26	20
Repetitive	$1,600,000	28	15	12
Continuous	$1,960,000	25	15	10

Metters Cabinets projects an annual demand of 24,000 units for the Maxistand. The selling price for the Maxistand is $120 per unit.

a) Based on the projected annual demand, the best alternative available is to use the Intermittent process.

b) The value of annual profit using this method is

$_____.

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