Answer the Following Question(s)using the Information Below

question 58

Multiple Choice

Answer the following question(s) using the information below.Speedy Dress Manufacturing has two workstations, cutting and finishing.The cutting station is limited by the speed of operating the cutting machine.Finishing is limited by the speed of the workers.Finishing normally waits for work from cutting.Each department works an eight-hour day.If cutting begins work two hours earlier than finishing each day, the two departments generally finish their work at about the same time.Not only does this eliminate the bottleneck, but also it increases finished units produced each day by 160 units.All units produced can be sold even though the change increases inventory stock by 20% from 400 units.The cost of operating the cutting department two more hours each day is $1,600.The contribution margin of the finished products is $6 each.Inventory carrying costs are $0.40 per unit per day.
-What is the total production per day if the change is made?

• A)6400 units
• B)800 units
• C)880 units
• D)1600 units
• E)640 units

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Definitions:

Flexible Budget Total

A financial plan that adjusts or varies with changes in the volume of activity or business.

Direct Labor Hours

The total hours of labor directly involved in producing goods or services, often used as a basis for allocating overhead costs.

Indirect Labor

Labor costs not directly associated with the production of goods or services, such as administrative and support personnel.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate budgeting and variance analysis.