Why is my answer wrong? CompDesk, Inc., makes a single model of an ergonomic des

Question

Why is my answer wrong? CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and productio levels are as follows: uilding 1 (Desks) 400 400 500 400 Monthly capacity Monthly production The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair sell for $273 each and have a variable cost of $116 each. Required: a. Is there a bottleneck at CompDesk in Building 1 or Building 2? OOBuilding 1 O Building 2 b. CompDesk's production supervisors state they could increase büilding 1's capacity by 100 desks per month by producing desks on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $16 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $18,200 per month. b-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.) & Answer is not complete. $ 27,300 Differential revenues Differential costs Fixed Variable 18,200 11,600

Explanation / Answer

b.1 : Computation of Differential Operating Profit ( Loss) Differential Unit Sales 100 a Differencial Revenue @$273 $27,300.00 b Differential Variable Cost Existing Variable cost @ $ 116 $11,600.00 Increased in Variable cost by @ $16/unit for 100 Unit $1,600.00 $13,200.00 c Differential Fixed Cost $3,640.00 ( $18200/500 Unit*100 Unit) a-b-c Differential Operating Proft $10,460.00 b-2 Yes Compdesk should produce desk on the weekend C.1 : Computation of Differential Operating Profit ( Loss) Differential Unit Sales 100 a Differencial Revenue @$273 $27,300.00 b Differential Variable Cost Variable cost @ $ 116 $11,600.00 c Differential Fixed Cost $2,820.00 ( $14100/500 Unit*100 Unit) a-b-c Differential Operating Proft $12,880.00 C-2 Yes Compdesk should produce desk on the weekend

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