Question

Brix, Inc., prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cooking. The current production is 3,000 dozen units per month. Because the demand has increased in recent months, management is considering adding another cooking station or else having the cooks in the cooking station start to work earlier. The monthly cost of operating the cooking station one more hour each day is $2,500. The cost of adding another cooking station would add an average of $11 per hour. The current operating hours total eight hours a day, 22 days a month. The contribution margin of the finished products is currently $8 per dozen. Either the extra hour or the new cooking station would increase production by 20 dozen a day. Assuming the company carries no inventory. Required: a. What is the total production per month if the change is made

Answer 1

Brix, Inc.

The total production per month if the change is made is:

3,440 dozen units.

Step-by-step explanation:

a) Data and Calculations:

Current production per month = 3,000 dozen units

Alternatives Cooking Station Extra Hour of Labor

Monthly cost $2,500

Average cost per hour $11

Current operating hours 8/day

Working days per month 22

Total monthly cost $1,936 ($11 * 8 * 22) $2,500

Add a new cooking station is cheaper by $564 per month since they each produce the same output per day.

Units added by extra hour or the new cooking station = 20 dozen a day

There are 22 days in a month, so the increase monthly = 440 (22 * 20)

Total monthly production will become 3,440 (3,000 + 440)