**Oakland Precision Products (OPP) Case Study: Production and Profit Analysis****Overview:**Oakland Precision Products (OPP) manufactures and sells various scales for kitchen and office use, catering primarily to kitchenware and discount stores. This case study focuses on two kitchen scales, the Cook and the Baker, and evaluates their production costs, pricing, and potential sales offers.**Cost Analysis (Per Unit):**| Costs per unit | Cook | Baker ||------------------|--------|--------|| Direct materials | $1.90 | $14.70 || Direct labor | $0.80 | $3.20 || Variable overhead| $0.60 | $2.40 || Fixed overhead | $8.30 | $15.60 || **Total cost** | $11.60 | $35.90 |- **Price:** $15.60 (Cook), $46.80 (Baker)- **Units produced and sold:** 230,000 (Cook), 120,000 (Baker)The average wage rate is $32 per hour. Variable overhead is dependent on direct labor-hours. The plant's capacity is 20,000 direct labor-hours, but currently, only 17,750 are utilized.**Sales Proposal Analysis:**1. **Scenario a:** A nationwide chain offers to buy additional models with a price reduction: - 30,000 Cook models at $10.60 each - 15,000 Baker models at $36.80 each - **a-1. Direct Labor-Hours Calculation:** Determine required additional hours. - **a-2. Profit Impact:** Calculate the differential profit with price adjustments while keeping regular sales prices stable.2. **Scenario b-1:** Offer for 50,000 Cook models and 30,000 Baker models with combined conditions: - Sale conditions: All units must be sold together or not at all. - Adjust regular sales to accommodate special orders within capacity constraints. - **b-1. Contribution Margin:** Calculate total contribution with special conditions. - **b-2. Profit Change Assessment:** Analyze profit changes assuming production capacity cannot be increased.3. **Scenario c-1 and c-2:** Overtime Production Consideration: - Overtime wage rate increase to $45 per hour. - Variable overhead costs rise by **Educational Resource: Understanding Differential Profit Analysis**### Context:In this exercise, we analyze a proposal from a nationwide kitchenware chain intending to purchase two types of models, Cook and Baker, at revised prices. This case study helps understand the concept of differential revenue and costs to determine profit changes.### Problem Statement:A chain has offered to buy:- 30,000 Cook models at $11 per unit- 15,000 Baker models at $37 per unit**Task A2:** Complete the table to assess the differential profit increase or decrease if OPP accepts the proposal. Regular sales prices will remain unchanged.### Table Analysis:**Differential Revenues:**- **Cook:** (Calculate the new total revenue based on 30,000 units at $11 each)- **Baker:** (The table shows initial placeholders, indicating calculations are needed)**Differential Costs:**- **Cook & Baker:** (Assess any changes in cost associated with producing additional units)**Outcome:**- Determine the differential profit or loss by comparing changes in revenue with changes in costs.### Explanation:By completing this table, students will see the impact of bulk pricing on overall profit, highlighting important decision-making factors in production and pricing strategies.

As a part of analysis, revenue and cost are compared for the different alternatives and the best…

Oakland Precision Products (OPP) manufactures and sells a variety of scales for the kitchen and office. OPP sells primarily to kitchenware stores, discount stores, and so on. Two of the scales it produces for kitchen use are the Cook and Baker. The Cook is a basic food scale. The Baker has a greater capacity and special features that facilitate adjusting baking recipes for more or fewer people. The following information is available: Costs per unit Direct materials Direct labor Variable overhead Fixed overhead Total cost per unit Price Units produced and sold Cook $ 1.90 0.80 0.60 8.30 Baker $14.70 3.20 2.40 15.60 $11.60 $ 35.90 $15.60 $46.80 230,000 120,000 The average wage rate is $32 per hour. Variable overhead varies with the quantity of direct labor-hours. The plant has a capacity of 20,000 direct labor-hours, but current production uses only 17,750 direct labor-hours. Required: a. A nationwide kitchenware chain has offered to buy 30,000 Cook models and 15,000 Baker models if the price is lowered to $10.60 and $36.80, respectively, per unit. a-1. If OPP accepts the offer, how many direct labor-hours will be required to produce the additional scales? a-2. Complete the following table to determine the differential profit increase (or decrease) if OPP accepts this proposal. Prices on regular sales will remain the same. b-1. Suppose that the kitchenware chain has offered instead to buy 50,000 Cook models at $10.60 per unit and 30,000 Baker models at $36.80. This customer will purchase the models only in an all-or-nothing deal. That is, OPP must provide all 50,000 units of the Cook model and 30,000 units of the Baker model or nothing at all. In view of its capacity constraints, OPP will reduce sales to regular customers as needed to fill the special order. Complete the table below to determine the total contribution margin with the special order added. b-2. How much will the profits change if the order is accepted? Assume that the company cannot increase its production capacity to meet the extra demand. c-1. Assume that, in the situation presented in requirement b-1, the plant can work overtime. Direct labor costs for the overtime production increase to $45 per hour. Variable overhead costs for overtime production are $6 per hour more than for normal production. Complete the table below to determine the total contribution margin. c-2. How much will the profits change in this situation compared to the capacity constraints scenario in requirement b-1?