User Account

All Pages

Calculate the amount of spare capacity available next month

Assignment Help Corporate Finance
Reference no: EM13878823

Emily Wye is currently working on the production schedules for next month. Her firm manufactures two types of ceramic grids:

Type A

Type B

 

£

£

Selling price

60

70

Material X1 (at £2 per kg)

3

6

Material X2 (at £5 per kg)

10

10

Direct labour (grade 1)

12

9

Direct labour (grade 2)

10

15

Variable  overhead

5

7

Notes:

(i) Labour rates and maximum labour hours available in the next month are:

Grade

Hourly rate

Max. monthly hours

1

£6

640

2

£5

Unlimited

(ii) Both products involve machine work, type A requiring 1 hour and B half an hour. The machine is available for 400 hours per month.

(iii) Next month the company will have available 900 kg of X1. The firm can buy as much X2 as it wishes.

(iv) Fixed overheads in the coming month will amount to £1950.

(a) The company wishes to maximise contribution. Set out the objective func- tion and the constraints.

(b) Determine the optimum output of each product next month using the graph- ical approach to linear programming. Calculate the optimum profit for the month.

(c) Calculate the amount of spare capacity available next month.

(d) Discuss three limitations of linear programming.

Jane Lane is the management accountant of a small manufacturing company. Jane normally gets involved in the production scheduling of the firm. She is currently working on this for the last three months of 2004, making use of her management accounting and linear programming skills.

The company manufactures components for rock climbing, including two types of ice axe, the X1 and the X2. During the last quarter of 2004, each X1 will have a selling price of £67 and each X2 a selling price of £78.

The cost of each axe is made up as follows:

In addition, monthly fixed manufacturing overheads are budgeted to be £2000 per month and fixed non-manufacturing overheads are budgeted to be £5000 for the three- month period.

The company will have the following resources available to it for the last quarter of the year: 800 metres of STX2, 2000 hours of labour and 1800 machine hours. The firm wishes to supply its retailers with no less than 150 of each type of axe during the final quarter.

(a) The company wishes to maximise contribution. Set out the objective function and the constraints.

(b) Determine the optimum production of each product over the final quarter using the graphical approach to linear programming and calculate the optimum net profit for the final quarter of 2004.

(c) Calculate the shadow price of STX2 and explain how Jane may use it.

Reference no: EM13878823

Questions Cloud

Contrast the various economic systems across the globe : Compare and contrast the various economic systems across the globe
Create a new product that will serve two business markets : Create a new product that will serve two business (organizational) markets. Write a 750-1,000-word paper that describes your product, explains your strategy for entering the markets, and analyzes the potential barriers you may encounter. Explain h..
Arrangement the tension in the rope : A 280-kg crate is supported by several rope-and-pulley arrangements as shown. Determine for each arrangement the tension in the rope.
Create a swot analysis : Create a SWOT Analysis for each of the two chosen companies change plans/programs, utilizing information obtained in the diagnosis. (Strengths, Weaknesses, Opportunities, Threats.)
Calculate the amount of spare capacity available next month : Calculate the amount of spare capacity available next month. Discuss three limitations of linear programming. Calculate the shadow price of STX2 and explain how Jane may use it.
Evaluate the impact of globalization and management across : Evaluate the impact of globalization and management across borders
Determine the equivalent force-couple system : A 25-lb force acting in a vertical plane parallel to the yz plane is applied to the 8-in.-long horizontal handle AB of a socket wrench. Replace the force with an equivalent force-couple system at the origin O of the coordinate system.
Solve dp problem that maximizes profit for local government : A local government has five parcels of land and would like to rent these parcels to three different farmers. The profits for the three farmers when a different number of parcels are allocated are shown in the following table.
A project requires an investment in machinery : A project requires an investment in machinery today of $25 million. That investment can be depreciated for tax purposes straight-line to zero over 5 years. Starting one year from now and ending 4 years from now, the project will generate annual reven..

Reviews

Write a Review

Corporate Finance Questions & Answers

  Write a corporate compliance plan

The plan should include a mission statement, statement of values, code of conduct statement, written standards and whatever other categories your team believes are required to deal with the many problems facing this company.

  What would be the new wacc

What would be the new WACC and what effect would this use of leverage have on the value of the firm - what would be Lowell Inc. s stock price?

  Multi-step and common-sized analysis and analytical balance

multi-step and common-sized analysis and analytical balance sheet refer to exercise 3 of both on conversion of balance

  The director of capital budgeting for big sky health

the director of capital budgeting for big sky health systems inc. has estimated the following cash flows in thousands

  What is the profitability index of the project

what is the profitability index of the project, what is the IRR of the project and what is the NPV of the project

  Find standard deviation of the annual rate of return

During the last 5 years, you owned two (2) stocks that had the following yearly rates of return and calculate the arithmetic mean yearly rate of return for every stock.

  The current price of a stock is 33 and the annual risk-free

the current price of a stock is 33 and the annual risk-free rate is 6. a call options with a strike price of 32 and

  What values should the company use for the four variables

What values should the company use for the four variables given here when it performs its best-case and worst-case scenario analysis?

  Determination of monthly payments

Suppose you borrow $350000 to create a new home. The bank charges an interest rate of 5 percent compounded monthly. If you pay back the loan after 25 years find your monthly payments.

  Cash for clunkers and roi

A clunker that travels 12,000 miles a year at fifteen mpg uses 800 gallons of gas a year. A vehicle that travels 12,000 miles a year at 25 mpg uses 480 gallons a year.

  Write statement of stockholders equity

The information from these statements is used to analyze and establish budgets, forecast, variance reports, and ratios, among other things, with the key being that they are only used internally).

  Market demand and supply

You know from information collected on the Widget Market that market demand & market supply have both raised recently.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd