Mr. Ollivander is the Operations Manager at Ollivander Enterprises LLC. Given the potential increase in demand for Ollivander's primary product, Phoenix core wands, he is considering procuring new equipment to produce the Phoenix core wands. He has a choice of the Quickwand machine that costs $ 20,000 to purchase and costs $ 5 to produce each wand or going with the Masterwand machine that costs $ 40,000. However, the Masterwand machine is more efficient and can produce each wand at only $ 3 per unit. Perform a cost-volume analysis and provide Mr. Ollivander with information that can help him make up his mind. Hint: You must draw the cross-over charts before you make a conclusion.
A. Mac Reynolds makes Ping-Pong balls in his Dallas plant. With the recent increase in taxes, his costs have gone up and he has a newfound interest in efficiency. Carl is interested in determining the productivity of his organization. He has last year's records and good current data. He has the following data:
Item Last Year Current Year
Production (units) 1,000 1,000
Labor (hours) 300 275
Resin (lbs.) 50 45
Energy (kWh) 3,000 2,850
i. Carl was hoping for an increase of 5 % each in labor productivity and energy productivity from last year to this year. Are Carl's plant operations meeting this goal?
ii. If each labor hour costs $ 6, each pound of resin costs $ 0.50 and each kWh of energy costs $ 0.10, what is the multifactor productivity for the current year. If Carl wanted a 15 % multifactor productivity increase for next year, by what percentage would labor hours have to decrease to obtain this increase (assuming other things remain the same)?