Reference no: EM133169429

Question - Assume the decisions to make pool shades and trellises are considered to be a long-term but small-scale decision and that Chandler would make these products one at a time when time is available, so as not to not delay any of the custom orders. While still a tactical decision, excess capacity cannot be guaranteed beyond the current year. As such, Chandler feels a resource usage approach would be a more appropriate approach to evaluating the decision to make the products.

Required -

a. Compute the ABC rates for new resources.

b. Compute the incremental profit of making and selling the full demand of pool shades.

c. Compute the average cost of making one pool shade.

d. Compute the incremental profit of making and selling the full demand of trellises.

e. Compute the average cost of making one trellis.

f. Given the assumptions aforementioned (such as long- term and small-scale), would Chandler's management choose to make either or both of the products? Explain your answer.