Upon Retirement, Mr

question 46

Essay

Upon retirement, Mr.Klaws started to make two types of children's wooden toys in his shop-Wuns and Toos.Wuns yield a variable profit of $9 each and Toos have a contribution margin of $8 each.Even though his electric saw overheats, he can make 7 Wuns or 14 Toos each day.Since he doesn't have equipment for drying the lacquer finish he puts on the toys, the drying operation limits him to 16 Wuns or 8 Toos per day.
(a)Solve this problem using the corner point method.
(b)For what profit ratios would the optimum solution remain the optimum solution?

---

Definitions:

Responsibility Centres

Sections or departments within an organization, each overseen by a manager who is accountable for its performance and financial outcomes.

Support Department Costs

Expenses associated with departments that do not directly produce goods or services but support those who do, like maintenance or administration.

Manufacturing Costs

Expenses directly tied to the process of producing finished goods, including raw materials, labor, and overhead costs.

Period Costs

Costs that are not directly tied to the production process and are expensed within the period they are incurred, such as selling, general, and administrative expenses.