Jones Corporation Is Preparing an Aggregate Production Plan for Washing

question 34

Multiple Choice

Jones Corporation is preparing an aggregate production plan for washing machines for the next four quarters.The company's expected quarterly demand is given in the following chart.The company will have 1,000 washers in inventory at the beginning of the year and wishes to maintain at least that number at the end of each quarter.Following is other critical data: Production cost per unit = $250
Inventory carrying cost per quarter per unit = $10 (based on quarter-ending inventory)
Hiring cost per worker = $1,000
Firing cost per worker = $2,000
Beginning number of workers = 10
Each worker can produce 100 units per quarter.
Any worker on the staff at the end of the year will not be fired at that time.
If Jones prefers a level plan,what will be the regular production rate per quarter?

• A)5,000 units
• B)4,000 units
• C)6,000 units
• D)Regular production will vary each month.

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Definitions:

Screen Printing

A printing technique that utilizes a mesh to transfer ink onto a substrate, except in areas made impermeable to the ink by a blocking stencil.

Variable Cost

Costs that vary in direct proportion to changes in the level of production or sales volume.

Fixed Cost

Fixed expenditures, including rent, salaries, and insurance, that are unaffected by changes in production or sales volumes.

Contribution Margin Ratio

A measure indicating the percentage of each sales dollar that contributes to covering fixed costs and generating profit, calculated as (Sales Revenue - Variable Costs) / Sales Revenue.