Grapevine Incorporated Produces Two Different Barrels Used in Wine Making

question 67

Essay

Grapevine Incorporated produces two different barrels used in wine making. (X and Y)
The company has three processes, cutting, forming, and curing. In cutting, the wood is cut to size and prepared for forming. In forming, the wood
is bent to shape and connected together to form the barrel. In curing, the seams are finished and the oak is left to process. In cutting, setup time
is 1/2 hour. The other two processes do not have any setup time. The demand for Component X is 90 units per day and the demand for Component Y
is 240 units per day. The minutes required per unit for each component are as follows: $$\begin{array} { l c c c } & \text { Cutting } & \text { Forming } & \text { Curing } \\\text { Component X } & 30 & 12 & 8 \\\text { Component Y } & 20 & 15 & 6\end{array}$$ The company operates one 8-hour shift. The cutting process employs 10 workers. Two hours of their time is used for setup.
The forming process is the most labor intensive and has 15 workers. The curing department is not labor intensive-the only significant unit-level
variable costs are materials and power. The department only employs 6 associates. For component X, the variable cost is $40 per unit
and for Component Y, it is $30 per unit. The selling price per barrel is $95 for Component X and $80 for Component Y.
Required:
a.Calculate the estimated daily potential profit.
b.Calculate the resources available in minutes for each area.
c.Calculate the resources demanded in minutes for each area and identify any bottlenecks.
d.What is the contribution margin per unit of bottleneck resource and what does that imply?

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