Alberts Wizzers2005

Alberts Wizzers2005 - ALBERT'S WIZZERS1 Albert is the CEO...

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ALBERT’S WIZZERS 1 Albert is the CEO of a company that manufactures two types of wizzers (standard and super) using two types of machines (STD-M and SUP-M). The standard wizzers are produced on the STD-M machines and then either sold to external customers or processed further on the SUP-M machines to obtain the super wizzers. Albert has excess capacity on both types of machines, but he has a limited number of skilled workers. In fact, he could use all of his skilled workers on the STD-M machines and produce only standard wizzers, although he has usually split his work force and processed some of the standard wizzers to produce what ever number of super wizzers he can sell. The standard wizzers are sold in a competitive market that will absorb his entire output at a price of $1,000 per unit. The price of super wizzers has been about $1,800 per unit for several years with a demand for about 4,000 units. However, while he can continue to sell 4,000 units this coming year, he can do so if he reduces the price to $1,400 per unit. The following is the reported income for last year: Standard Wizzers Super Wizzers Units produced Units sold Units Transferred 10,000 6,000 4,000 4,000 4,000 Revenue $ 6,000,000 $ 7,200,000 Production Costs Standard wizzers $3,600,000 Direct Materials $ 5,000,000 800,000 Direct Labour 1,000,000 400,000 Overhead
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Alberts Wizzers2005 - ALBERT'S WIZZERS1 Albert is the CEO...

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