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Home / Questions / EXERCISE B 2 Volume Trade-Off Decision LO2 Bateaux du Bois Ltd makes reproductions of cl...

EXERCISE B 2 Volume Trade-Off Decision LO2 Bateaux du Bois Ltd makes reproductions of classic wooden boats The bottleneck in the pro- duction process is fitting wooden planks to build up the

EXERCISE B–2 Volume Trade-Off Decision  [LO2]

Bateaux du Bois, Ltd., makes reproductions of classic wooden boats. The bottleneck in the pro- duction process is fitting wooden planks to build up the curved sections of the hull. This process requires the attention of the shop’s most experienced craftsman. A total of 1,800 hours are available per year in this bottleneck operation. Data concerning the company’s four products appear below:

 

Trader

Trapper

Quebec

Runner

Unit contribution margin . . . . . . . . . . . .

$444

$464

$312

$462

 

 

 

 

 

No fixed costs could be avoided by modifying how many units are produced of any product or even by dropping any one of the products.

Required:

1.       Is there sufficient capacity in the bottleneck operation to satisfy demand for all products?

2.       What is the optimal production plan for the year?

3.       What would be the total contribution margin for the optimal production plan you have proposed?

Jun 27 2020 View more View Less

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