1. Given the following data for Albert\'s fabricating production area: Fixed cos

Question

1. Given the following data for Albert's fabricating production area:

Fixed costs for one shift                          =        $60,000

Unit variable cost                                     =        $7

Number of machines                                =        56

Number of working days in year             =        340

Processing time per unit                          =        40 minutes

Assume a breakeven volume of 12,000 units

a. What is the annual capacity with a single 8-hour shift?

  

b. What is the capacity with two shifts?

           

c. What is the break-even volume with a single-shift operation?

           

d. What is the maximum revenue with a single shift?

e. What is the break-even volume with a two-shift operation?

Explanation / Answer

A.

B.

C.

Fc = Fixed Cost

p = Price per unit

v = Variable cost per unit

Break Even sale = 12,000 Already mentioned in question

A Fixed Cost per shift = $60,000 B Unit Variable Cost = $7 C Number of Machines = 56 D Number of working days in year = 340 E Processing time per unit (Minutes) = 40 F = E/60 Processing time per unit (Hour) =             0.67 G Break even volume =          12,000 H Processing time per unit (Hour) =             0.67 I Number of hours in one shift = 8 J = H*I Number of units in a day =                  5 K = J*D Annual production per machine =           1,813 L = C*K Total Annual Production =        101,547

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