Lynn Corporation is a manufacturer of tables sold to schools, restaurants, hotel

Question

Lynn Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Lynn, but the table legs are purchased from an outside supplier. The Assembly D epartment takes a manufactured table top and attaches the four purchased table legs. It takes 20 minutes of labor to assemble a table. The company follows a policy of producing enough tables to insure that 40% of next month's sales are in the finished goods inventory. Lynn also purchases sufficient raw materials (legs) to insure that raw materials (legs) inventory is 60% of the following month's scheduled production needs. Lynn’s sales budget in units for the next quarter is as follows:

July 2,300

August 2,500

September 2,100

Lynn's ending inventories in units for June 30 are:

Finished Goods 1,900

Raw Materials (legs) 4,000

Required:

A) The number of tables to be produced during August is:

B) Disregarding your response to the previous question, assume the required production for August and September is 1,600 and 1,800 units, respectively, and the July 31 raw materials (legs) inventory is 4,200 units. The number of table legs to be purchased in August is:

c) Assume that Lynn Corporation will produce 1,800 units in the month of September. How many employees will be required for the Assembly Department? (Fractional employees are acceptable since employees can be hired on a part-time basis. Assume a 40-hour week and a 4-week month.)

Explanation / Answer

A) July August September Sales units 2300 2500 2100 Add : closing inventory desired 1000 840 (40% of the following month sales) Total finished goods required 3300 3340 Less : opening inventory 1900 1000 Number of tables produced 1400 2340 Number of tables to be produced during August 2340 B) August September Required production 1600 1800 Legs required per table 4 4 Total legs required 6400 7200 closing inventory ( legs ) reqd 4320 Total legs required 10720 Less : opening inventory ( legs) 4200 Total legs to be purchased 6520 Number of legs required to be purchased in August 6520 C) September Required production 1800 Required time per table 0.33 hours Total time required 600 hours An employe works for ( 40 * 4 = 160 hours ) per month Total time required 600 hours Number of hours worked per employee 160 hours Number of employees required 3.75 employees

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