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 Break-even Point

The point at which a business generates enough cash flow to cover its operating expenses, without generating a profit or loss.

Variable Cost

Expenditures that fluctuate according to the degree of production or the volume of goods produced.

Fixed Cost

Costs that remain constant regardless of any change in a firm's activity level, such as lease payments or insurance premiums.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life.