The company suddenly acquires an additional 500 extra labour hours at no extra costs. However,...
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The company suddenly acquires an additional 500 extra labour hours at no extra costs. However, the 500 extra labour hours can only be applied to the Chile's Chivito sandwich. What is the increase of cash flows from the 500 extra labour hours?
Appendix 1 Sandwich Information Cubana Delight Existing Chacarero Beef Pambazo Chorizo Proposed Chile's Mediterranean Chivito Light 0.08 0.06 0.05 0.07 0.05 Labour per unit (hours) Estimated demand (units) Total labour hours 30,000 35,000 42,000 15,000 15,000 2,400 2,100 2,100 1,050 750 $9.50 $9.55 $9.00 $10.00 $8.00 (4.35) (4.55) (5.00) (4.85) (3.40) Sales price Direct materials Direct labour (1) Fixed overhead (2) Profit (0.96) (0.72) (0.60) (0.84) (0.60) (3.43) $0.76 (3.43) $0.85 (3.43) $(0.03) (3.43) $0.88 (3.43) $0.57
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