CI manufactures car doors using two main process operationsStamping & Pressing and information on...

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Accounting

CI manufactures car doors using two main process operationsStamping & Pressing and information on the business is as shownbelow:-
STAMPING
PRESSING
ANNUAL CAPACITY
6,000 hrs
6,000 hrs
Capacity per hr
20 units
15 units
Annual production
90,000 units
90,000 units
Department Fixed Costs
$720,000
$$1,080,000
DOOR SALES
Selling Price per unit
$100
Direct Cost per unit
$40
Identify the constraint(s) if any
Analyze the company’s cost and income structure
Can you identify if there is idle capacity and if so can youquantify this?
How much is the company losing from unused capacity?
Do you have any recommendations for improvement?

Answer & Explanation Solved by verified expert

4.4 Ratings (946 Votes)

Solution 1 Constraints are hours available in Stamping and Pressing department Both department is having annual capacity of 6000 hours only Solution 2 Cost and income structure Variable cost per unit 40 Total fixed costs 720000 1080000 See Answer

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In: AccountingCI manufactures car doors using two main process operationsStamping & Pressing and information on the...CI manufactures car doors using two main process operationsStamping & Pressing and information on the business is as shownbelow:-STAMPINGPRESSINGANNUAL CAPACITY6,000 hrs6,000 hrsCapacity per hr20 units15 unitsAnnual production90,000 units90,000 unitsDepartment Fixed Costs$720,000$$1,080,000DOOR SALESSelling Price per unit$100Direct Cost per unit$40Identify the constraint(s) if anyAnalyze the company’s cost and income structureCan you identify if there is idle capacity and if so can youquantify this?How much is the company losing from unused capacity?Do you have any recommendations for improvement?

		STAMPING	PRESSING
ANNUAL CAPACITY		6,000 hrs	6,000 hrs
Capacity per hr		20 units	15 units
Annual production		90,000 units	90,000 units

Department Fixed Costs		$720,000	$$1,080,000

DOOR SALES
Selling Price per unit	$100
Direct Cost per unit	$40