CompDesk, Inc., makes a single model of an ergonomic desk (withchair) for computer usage. The desk is manufactured in building 1,and the chair is manufactured in building 2. Monthly capacities andproduction levels are as follows:

	Building 1(Desks)	Building 2(Chairs)
Monthly capacity	400	500
Monthly production	400	400

The company will sell a desk only with a chair and can sell 500desks per month. The units (desk with chair) sell for $327 each andhave a variable cost of $134 each.

Required:

a. Is there a bottleneck at CompDesk inBuilding 1 or Building 2?

b. CompDesk’s production supervisors state theycould increase building 1’s capacity by 100 desks per month byproducing desks on the weekend. Producing on the weekend would notaffect the sales price. Variable cost per unit would increase by$34 for those produced on the weekend because of the premium paidto labor. Fixed costs would also increase by $21,800 per month.

b-1. Calculate the differential operatingprofit (loss). (Losses and amounts to be deducted should beindicated with a minus sign.)

b-2. Should CompDesk produce desks on theweekend?

c. Independent of the situation in requirement(b), CompDesk could add additional equipment and workersto building 1, which would increase its capacity by 100 desks permonth. This would not affect the sales price or variable cost perunit but would increase fixed costs by $15,900 per month.

c-1. Calculate the differential operatingprofit (loss). (Losses and amounts to be deducted should beindicated with a minus sign.)

c-2. Should CompDesk add the additionalequipment and workers to building 1?