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(Solution Download) Enumclaw Brick, Inc., manufactures bricks using clay deposits on the companyAc??cs property. Raw


 

 

 

 

 

 

 

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 correct  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1b.Is there sufficient capacity in

 

the kiln to satisfy demand for all products?

No correct

 

 

 

 

 

 

 

 

 

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

ProductsNumber of

 

Units

 

to be Produced

  Textured

 

Facing correct

 

747 incorrect     

  Traditional

 

Brick correct

 

861 incorrect     

  Cinder

 

Block correct

 

1,098 incorrect     

  Roman

 

Brick correct

 

152 incorrect     

 

  

 

 

 

 

 

 

 

 

 

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 correct  

 

 

 

 

 

 

 

 

 

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 correct per hour

 

 

 

 

 

 

 

 

 

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 correct  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 incorrect

 

 


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