A Paint Company Has the Following Aggregate Demand Requirements and Cost

question 2

Essay

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
$$\begin{array} { c c } \text { Quarter } & \text { Forecast Demand units) } \\\hline 1 & 1,200 \\2 & 1,500 \\3 & 1,900 \\4 & \underline { 1,000 } \\\text{Total}&5,600\end{array}$$ $$\begin{array} { l c } \begin{array} { l } \text { Previous quarter's producton: } \\\text { Bepinging inventory: } \\\text { Backorder costs: }\end{array} & \begin{array} { l } \text { 900 units } \\\text { 0units } \\\$ 60 / \text { unit }\end{array} \\ \text { Iventory holding cost } & \\\begin{array} { l } \text { on ending inventory): } \\\text { Hiring employees: } \\\text { Firing employees: }\end{array} & \begin{array} { l } \text { \$12/unit/quarter } \\\$ 30 \text { unit increase } \\\$ 70 \text { unit decrease }\end{array} \\\end{array}$$
a. Determine the change in workforce costs hiring and firing (employees) if the paint company decides to use a chase demand strategy.
b. Determine the inventory holding and backorder costs for the year if the paint company wants to use a level production strategy, ending Quarter 4 with no inventory.

Analyze the process of applying manufacturing overhead to specific jobs.

Grasp the methodology of using a plantwide predetermined manufacturing overhead rate.

Calculate total manufacturing costs assigned to specific jobs.

Understand the impact of manufacturing overhead on job cost sheets.

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Definitions:

Output Effect

The impact on an organization's total output resulting from a change in price, affecting the quantity supplied or demanded.

Substitute Resource

A resource that can be used in place of another, often relevant in the context of production or environmental sustainability.

MRP Curve

The marginal revenue product curve, which shows the additional revenue generated by one additional unit of an input.

Imperfectly Competitive Market

A market structure in which participants have some control over the prices because not all conditions of perfect competition are met, such as monopolistic competition and oligopoly.