Table Top Produces Tables Sold to Discount Stores $$\begin{array} { l l } \text { July } & 2,300 \\\text { August } & 2,500 \\\text { September } & 2,100\end{array}$$

question 33

Multiple Choice

Table Top produces tables sold to discount stores. The table tops are manufactured in Canada by Table Top, but the table legs are manufactured in a plant in Nogales, Mexico. The assembly department attaches the four purchased table legs to the table top. It takes 20 minutes of labour to assemble a table. The company follows a policy of producing enough tables to insure that 40% of next month's sales are in the finished goods inventory. Table Top also purchases sufficient raw materials to insure that raw materials inventory is 60% of the following month's scheduled production. Table Top's sales budget in units for the next quarter is as follows: $$\begin{array} { l l } \text { July } & 2,300 \\\text { August } & 2,500 \\\text { September } & 2,100\end{array}$$ Table Top's ending inventories in units for June 30, 20x5 are: $$\begin{array} { l l } \text { Finished goods } & 1,900 \\\text { Raw materials (legs) } & 4,000\end{array}$$
Assume that Table Top will produce 1,800 units in the month of September 20x5. How many employees will be required for the assembly department? (Fractional employees are acceptable since employees can be hired on a part-time basis. Assume a 40-hour work week and a 4-week month.)

• A) 15 employees
• B) 3.75 employees
• C) 600 employees
• D) 1.5 employees

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Definitions:

Cash Flow Forecasts

Estimates of the amount of money expected to flow in and out of a business over a specific period, used for budgeting and financial planning purposes.

NPV

Net Present Value is the difference between the current value of cash inflows and the current value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Simulation Analysis

A combination of scenario and sensitivity analyses.

Capital Budgeting

The process by which investors and managers decide which long-term projects or investments a business should undertake, based on potential profitability.