Racquet Master (RM) Sports Manufactures and Distributes Two Types of Tennis

question 107

Essay

Racquet Master (RM) Sports manufactures and distributes two types of tennis rackets: Dominant Drive (DD) and Major Smash (MS). Both types of rackets go through Operations 1 and 3. MS also goes through Operation 2, which adds a layer of graphite for additional strength. All material is added at the beginning of their respective operations.
The following information relates to a work order from Discount Warehouse, Inc. for 30,000 units of DD (Work order #286) and 8,000 units of MS (Work order #354).
$\begin{array}{lrr}&\text { Work order\#286 }&\text {Work order \#354 }\\\text { Direct materials: }\\\text { Operation 1 } & \$ 120,000& \$ 80,000 \\\text { Operation 2 } & --- & 20,000 \\\text { Operation 3 } & 45,000 & 30,000\\\text { Conversion costs: } & & \\\text { Operation 1 } & 30,000 & 15,000 \\\text { Operation 2 } & --- & 25,000 \\\text { Operation } 3 & 14,793 & 14,896\end{array}$

Required:
Assume that there are 3,000 units of DD and 2,000 units of MS in Operation 3 at the end of the reporting period that are 45% and 65% complete, respectively. Compute the ending inventory for Operation 3.

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Definitions:

Master Production Schedule

A detailed plan that outlines what a business needs to produce, how much, and when, over a certain period.

Aggregate Plan

An aggregate plan is a strategy for meeting forecasted demand by adjusting production rates, workforce levels, inventory levels, and other operational variables in the short to medium term.

Level Scheduling

A production planning method aimed at producing goods at a consistent rate, minimizing fluctuations in production levels and inventory.

Counterseasonal Demand

Demand for products or services that occurs during opposite or different seasons than the peak season.