Question Details
Enumclaw Brick, Inc., manufactures bricks using clay deposits on
the companyAc??cs property. Raw clays are blended and then extruded
into molds to form unfired bricks. The unfired bricks are then
stacked onto movable metal platforms and rolled into the kiln where
they are fired until dry. The dried bricks are then packaged and
shipped to retail outlets and contractors. The bottleneck in the
production process is the kiln, which is available for 2,858 hours
per year. Data concerning the companyAc??cs four main products appear
below. Products are sold by the pallet.
|
Traditional
Brick | Textured
Facing | Cinder
Block | Roman
Brick | |
| Gross revenue per
pallet | $ 1,072
| $ 1,547
| $ 852
| $ 1,129
|
| Contribution margin
per pallet | $ 539
| $ 702
| $ 426
| $ 432
|
| Annual demand
(pallets) | 123
| 83
| 183
| 67
|
| Hours required in
the kiln per pallet | 7
| 9
| 6
| 8
|
| No fixed costs could be avoided
by modifying how much is produced of any product. |
Required: | |
| 1a. | Calculate the total hours
required in the kiln to satisfy demand for all products. |
| Total hours |
3,242 |
| 1b. | Is there sufficient capacity in
the kiln to satisfy demand for all products? |
No  |
2. | What is the production plan for
the year that would maximize the companyAc??cs profit based on the
profitability index? (Omit the "$" sign in your
response.) |
Production Plan | |||
| Products | Number of
Units
to be Produced | ||
| Textured
Facing |
747 | ||
| Traditional
Brick |
861 | ||
| Cinder
Block |
1,098 | ||
| Roman
Brick |
152 | ||
3. |
What would be the total contribution margin for the production
plan you have proposed? (Omit the "$" sign in your
response.)
|
| Total contribution
margin | $
210,729 |
4. |
The kiln could be operated for more than 2,858 hours per year by
running it after normal working hours. Up to how much per hour
should the company be willing to pay in overtime wages, energy
costs, and other incremental costs to operate the kiln additional
hours? (Omit the "$" sign in your response.)
|
| Maximum amount to
operate the kiln | $
54 |
5. |
The company is considering introducing a new product, glazed
Venetian bricks, that would have a variable cost of $526 per pallet
and would require 15 hours in the kiln. What is the minimum
acceptable selling price for this new product? (Omit the
"$" sign in your response.)
|
| Selling price | $
1,336 |
6. |
Salespersons are currently paid a commission of 8% of gross
revenues. Will this motivate the salespersons to make the right
choices concerning which products to sell most aggressively?
|
Yes
|
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DATE ANSWEREDDec 08, 2020
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