Problem Data Cost data Regular-time labor cost per hour $10.00 Overtime labor cost per hour $15.00 Subcontracting cost per unit (labor only) $84.00 Holding cost per unit per period $10.00 Back-order cost per unit per period $20.00 Hiring cost per employee $600.00 Firing cost per employee $450.00 Capacity data Beginning workforce 210 employees Beginning inventory 400 units Labor standard per unit 6 hours Regular time available per period 160 hours Overtime available per period 32 hours Subcontracting maximum per period 1000 units Subcontracting minimum per period 500 units Demand data Period 1 6000 units Period 2 4800 units Period 3 7840 units Period 4 5200 units Period 5 6560 units Period 6 3600 units The BackPack Company produces a line of backpacks. The manager, Jill Nicholas, is interested in using a level aggregate plan. Inventories and back orders will be used to handle demand fluctuations. She has asked you to develop such a plan. (a) Calculate the aggregate production rate. (b) Calculate the appropriate workforce given the aggregate production rate. (c) Show what would happen if this plan were implemented. (d) Calculate the costs of this plan. (e) Evaluate the plan in terms of cost, customer service, operations, and human resources.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem Data
Cost data
Regular-time labor cost per hour	$10.00
Overtime labor cost per hour	$15.00
Subcontracting cost per unit (labor only)	$84.00
Holding cost per unit per period	$10.00
Back-order cost per unit per period	$20.00
Hiring cost per employee	$600.00
Firing cost per employee	$450.00
Capacity data
Beginning workforce	210 employees
Beginning inventory	400 units
Labor standard per unit	6 hours
Regular time available per period	160 hours
Overtime available per period	32 hours
Subcontracting maximum per period	1000 units
Subcontracting minimum per period	500 units
Demand data
Period 1	6000 units
Period 2	4800 units
Period 3	7840 units
Period 4	5200 units
Period 5	6560 units
Period 6	3600 units

The BackPack Company produces a line of backpacks. The manager, Jill Nicholas, is interested in using a level aggregate plan. Inventories and back orders will be used to handle demand fluctuations. She has asked you to develop such a plan.
(a) Calculate the aggregate production rate.

(b) Calculate the appropriate workforce given the aggregate production rate.

(c) Show what would happen if this plan were implemented.

(d) Calculate the costs of this plan.

(e) Evaluate the plan in terms of cost, customer service, operations, and human resources.

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