Loose-leaf for Operations Management (The Mcgraw-hill Series in Operations and Decision Sciences)
12th Edition
ISBN: 9781259580093
Author: William J Stevenson
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 5, Problem 3P
A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.
a. What volume per month is required in order to break even?
b. What profit would be realized on a monthly volume of 61,000 units? 87,000 units?
c. What volume is needed to obtains a profit of $16,000 per month?
d. What volume is needed to provide a revenue of $23,000 per month?
e. Plot the total cost and total revenue lines.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $7,900 per month and variable cost of 62 cents per unit produced. Each item is sold to retailers at a price that averages 85 cents. (Round all answers to a whole number.)
a. What volume per month is required in order to break even?
b. What profit would be realized on a monthly volume of 65,000 units? 85,000 units?
c. What volume is needed to obtain a profit of $13,000 per month?
d. What volume is needed to provide a revenue of $20,000 per month?
A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $7,400 per month and variable costs of $0.73 per unit produced. Each item is sold to retailers at a price that averages $1.13a) The volume per month is required in order to break even = (in whole number) b) The profit or loss would be realized on a monthly volume of 61,000 units = c) The volume is needed to obtain a profit of $16,000 per month = (in whole number) d) The volume is needed to provide revenue of $23,000 per month = (in whole number)
A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered
will have fixed costs of $11,152 per month and variable costs of $1.23 per unit produced. Each item is sold to retailers at a price that averages $2.07
a) The volume per month is required in order to break even = Blank 1 (in whole number)
b) The profit or loss would be realized on a monthly volume of 61,000 units Blank 2
c) The volume is needed to obtain a profit of $16,000 per month = Blank 3 (in whole number)
d) The volume is needed to provide revenue of $23,000 per month = Blank 4 (in whole number)
Chapter 5 Solutions
Loose-leaf for Operations Management (The Mcgraw-hill Series in Operations and Decision Sciences)
Ch. 5.8 - Explain the meaning of the phrase Hours versus...Ch. 5.8 - Prob. 1.2RQCh. 5.8 - Prob. 1.3RQCh. 5.8 - Prob. 1.4RQCh. 5.8 - Prob. 1.5RQCh. 5.S - Prob. 1DRQCh. 5.S - Prob. 2DRQCh. 5.S - Explain the term bounded rationality.Ch. 5.S - Prob. 4DRQCh. 5.S - Prob. 5DRQ
Ch. 5.S - What information is contained in a payoff table?Ch. 5.S - Prob. 7DRQCh. 5.S - Prob. 8DRQCh. 5.S - Under what circumstances is expected monetary...Ch. 5.S - Explain or define each of these terms: a. Laplace...Ch. 5.S - Prob. 11DRQCh. 5.S - Prob. 12DRQCh. 5.S - Prob. 13DRQCh. 5.S - Prob. 1PCh. 5.S - Refer to problem1. Suppose after a certain amount...Ch. 5.S - Refer to Problems 1 and 2 Construct a graph that...Ch. 5.S - Prob. 4PCh. 5.S - Prob. 5PCh. 5.S - The lease of Theme Park, Inc., is about to expire....Ch. 5.S - Prob. 7PCh. 5.S - Prob. 8PCh. 5.S - Prob. 9PCh. 5.S - A manager must decide how many machines of a...Ch. 5.S - Prob. 11PCh. 5.S - Prob. 12PCh. 5.S - Prob. 13PCh. 5.S - Prob. 14PCh. 5.S - Give this payoff table: a. Determine the range of...Ch. 5.S - Prob. 16PCh. 5.S - Repeat all parts of problem 16, assuming the value...Ch. 5.S - Prob. 18PCh. 5 - Prob. 1DRQCh. 5 - Prob. 2DRQCh. 5 - How do long-term and short-term capacity...Ch. 5 - Give an example of a good and a service that...Ch. 5 - Give some example of building flexibility into...Ch. 5 - Why is it important to adopt a big-picture...Ch. 5 - What is meant by capacity in chunks, and why is...Ch. 5 - Prob. 8DRQCh. 5 - How can a systems approach to capacity planning be...Ch. 5 - Prob. 10DRQCh. 5 - Why is it important to match process capabilities...Ch. 5 - Briefly discuss how uncertainty affects capacity...Ch. 5 - Prob. 13DRQCh. 5 - Prob. 14DRQCh. 5 - Prob. 15DRQCh. 5 - Prob. 16DRQCh. 5 - What is the benefit to a business organization of...Ch. 5 - Prob. 1TSCh. 5 - Prob. 2TSCh. 5 - Prob. 3TSCh. 5 - Prob. 1CTECh. 5 - Prob. 2CTECh. 5 - Identify four potential unethical actions or...Ch. 5 - Any increase in efficiency also increases...Ch. 5 - Prob. 1PCh. 5 - In a job shop, effective capacity is only 50...Ch. 5 - A producer of pottery is considering the addition...Ch. 5 - A small firm intends to increase the capacity of a...Ch. 5 - A producer of felt-tip pens has received a...Ch. 5 - A real estate agent is considering changing her...Ch. 5 - A firm plans to begin production of a new small...Ch. 5 - A manager is trying to decide whether to purchase...Ch. 5 - A company manufactures a product using two machine...Ch. 5 - A company must decide which type of machine to...Ch. 5 - Prob. 11PCh. 5 - A manager must decide how many machines of a...Ch. 5 - Prob. 13PCh. 5 - The following diagram shows a four-step process...Ch. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - A new machine will cost 18,000, butt result it...Ch. 5 - Remodelling an office will cost 25,000 and will...Ch. 5 - Prob. 1CQCh. 5 - Prob. 2CQCh. 5 - Prob. 3CQ
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- What options are available for altering the capacity of (a) anelementary school, (b) a prison, and (c) an airline?arrow_forward2) A company is considering a plan to produce or buy/outsource a certain item used in the production of new type of cars. Making the item would involve annual lease costs of $150,000. Cost and volume estimates are as follows: Make Buy Annual fixed cost $150,000 None Variable cost/unit $60 $80 Annual volume 12,000 12,000 (units) a. Given these numbers, should the firm buy or make this item? b. There is a possibility that volume could change in the future. At what volume would the company be indifferent between making and buying?arrow_forwardA small business owner is contemplating the addition of another product line. Capacity increases and equipment will result in an increase in annual fixed costs of $50,000. Variable costs will be $25 per unit.A) What unit selling price must the owner obtain to break-even on a volume of 2,500 units a year?B) Because of market conditions, the owner feels a revenue of $47 is preferred to the value determined in part A. What volume of output will be required to achieve a profit of $16,000 using this revenue?arrow_forward
- A company has a factory that is designed so that it is most efi cient (average unit cost is minimized) when producing 15,000 units of output each month. However, it has an absolute maximum output capability of 17,250 units per month, and can produce as little as 7,000 units per month without corporate headquarters shifting production to another plant. If the factory produces 10,925 units in October, what is the capacity utilization rate in October for this factory?arrow_forwardCairney, Incorporated manufactures a specialized part used in internal combustion engines. The annual demand for the part is 249,000 units. The facility has a practical capacity of 264,000 units annually. The company leased the current facility because facilities capable of manufacturing the unit require machines that can produce 66,000 units each. The annual cost of the facility is $1,013,760. The variable cost of a part is $4. Required: What cost per unit should the cost system report to facilitate management decision making? Note: Round your answer to 2 decimal places. What is the cost of excess capacity? cost per unit cost of excess capacityarrow_forward4.) After 10 years of production, the chemical manufacturing plant has become very successful. Because of its success, a great demand for products came as many consumers wanted the company to sell them their products. To meet the demand, three alternatives were considered. Work overtime to meet demands. Annual overtime expenses are $500,000. Expand the plant to accommodate more production. Fixed annual expenses are $2,500,000. Make a contract with another company to produce additional products at a rate of $1,000,000. The cost of manufacturing products from the three alternatives are $3500, $3000 and $3250 per unit respectively. The plant sells every unit made regardless of how they were made at $15,000 per unit. The expected demand for the product is 150 units with a probability of 50% 250 units with a probability of 35% 350 units with a probability of 7.5% 400 units with a probability of 5% 500 units with a probability of 2.5%arrow_forward
- Hickory Manufacturing Company forecasts the following demand for a product (in thousands of units) over the next five years. 1 2 3 4 5 86 90 Year Forecast demand Currently the manufacturer has seven machines that operate on a two-shift (eight hours each) basis. Thirty days per year are available for scheduled maintenance of equipment with no process output. Assume there are 250 workdays in a year. Each manufactured good takes 20 minutes to produce. a. What is the effective capacity of the factory? Round your answer down to the nearest whole number. units, year b. Given the five-year forecast, how much extra capacity is needed each year? Use a minus sign to enter an answer, if there is excess capacity, Round your answers to the nearest whole number. Year 1 Additional machines needed 2 1 24 Extra capacity needed (units) C. Does the firm need to buy more machines? If so, how many? When? If your answer is zero, enter "0". Round your answers up to the nearest whole number. 4 3 4 5 PEarrow_forward1. Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $160,000. Variable production and material costs are estimated to be $6 per book. The publisher plans to sell the text to college and university bookstores for $46 each. a. If the publisher believes that the price per copy could be increased to $50.95 and not affect the anticipated demand of 3800 copies, what action would you recommend? What profit or loss can be anticipated?arrow_forwardAdvise the MD, providing detailed explanation using the table above.arrow_forward
- Idle production capacity may be related to inven-tory or capacity management. How would thepricing component of the marketing mix reduceidle production capacity for (a) a car wash, (b) astage theater group, and (c) a university?arrow_forwardBaker Manufacturing Company forecasts the following demand for a product (in thousands of units) over the next five years. 5 2 3 4 123 125 127 126 Year Forecast Demand Currently the manufacturer has eight machines that operate on a two-shift (eight hours each) basis. Twenty days per year are available for scheduled maintenance of equipment. Assume there are 250 workdays in a year. Each manufactured good takes 20 minutes to produce. 1 106 a. What is the effective capacity of the factory? Round your answer down to the nearest whole number and use this answer in subsequent computations. Year Additional machines needed units/year b. Given the five-year forecast, how much extra capacity is needed each year? Round your answers to the nearest whole number. Year 1 2 3 Extra capacity needed (units) c. Does the firm need to buy more machines? If so, how many? When? If your answer is zero, enter "0". Round your answers up to the nearest whole number. 1 2 3 4 5 5arrow_forwardEastman Publishing Company is considering publishing an electronic textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and Web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell access to the book for $46 each. a. What is the break even point? b. what profit or loss can be anticipated with a demand for 3800 copies c. Wiht a 3800 copy demand, proced at $50.95 , what profit or loss can be expected?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational Publishing
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Marketing
Marketing
ISBN:9780357033791
Author:Pride, William M
Publisher:South Western Educational Publishing
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY