Merton Truck Company

Topics: Variable cost, Capacity utilization, Blanking Pages: 2 (977 words) Published: November 1, 2014

. Section 1 ; Group 2FT 12113 Anuja DashFT 12102 Abhay BohraFT 12189 Pramod Ravi ShankarFT 12127 Harendra SinghFT 12168 Tushar AroraFT 12104 Abhilash Mohapatra 2. Specification Model 101 Model 102DM 24000 20000 Direct LabourEngine assembly 1200 2400Metal Stamping 800 600Final Assembly 2000 1500Total DL 4000 4500 Variable OverheadEngine assembly 2100 4000Metal Stamping 2400 2000Final Assembly 3500 2500Total Variable Overhead 8000 8500Selling Prices 39000 38000Total Variable Cost 36000 33000Contribution Margin per Unit 3000 5000 Section 1: Group 2: PAAATH 4/8/2012 2 3. Fixed OverheadEngine assembly 1700000Metal Stamping 2700000Final Assembly 2700000 1500000Total Fixed Over Head 8600000 Section 1: Group 2: PAAATH 4/8/2012 3 4. Engine Assembly 1* Model 101 2* Model 102 <= 4000Metal Stamping 2* Model 101 2* Model 102 <= 6000Model 101 assembly 2* Model 101 0* Model 102 <= 5000Model 102 assembly 0* Model 101 3* Model 102 <= 4500Non Negative Model 101 1* Model 101 0* Model 102 >= 0Non Negative Model 102 0* Model 101 1* Model 102 >= 0Maximize Profit = UCM Model 101*units Model 101+ UCM Model 102*units Model 102 -Fixed Overheads Section 1: Group 2: PAAATH 4/8/2012 4 5. VariablesModel 101 Model 102 Objective 2000 1000 2400000 Section 1: Group 2: PAAATH 4/8/2012 5 6. Sensitivity Analysis Final Reduced Objective Allowable Allowable Name Value Cost Coefficient Increase DecreaseModel 101 2000 0 3000 2000 500Model 102 1000 0 5000 1000 2000 Final Shadow Constraint Allowable Allowable Name Value Price R.H. Side Increase DecreaseEngine Assembly 4000 2000 4000 500 500Metal Stamping 6000 500 6000 500 1000Model 101 assembly 4000 0 5000 1E+30 1000Model 102 assembly 3000 0 4500 1E+30 1500Non Negative Model 101 2000 0 0 2000 1E+30Non Negative Model 102 1000 0 0 1000 1E+30 Section 1: Group 2: PAAATH 4/8/2012 6 7. Shadow price of Engine Assembly is 2000 $So if Assembly unit capacity is increased from 4000 to 4001 thenExtra unit Engine Assembly capacity is worth 2000$...
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