Question: Portal Corporation produces the same laser printer in two Utah

Portal Corporation produces the same laser printer in two Utah plants, a new plant in Ogden and an older plant in Sandy. The following data are available for the two plants:

All fixed costs per unit are calculated based on a normal capacity usage consisting of 240 working days. When the number of working days exceeds 240, overtime charges raise the variable manufacturing costs of additional units by $ 5.00 per unit in Ogden and $ 10.00 per unit in Sandy.
Portal Corporation is expected to produce and sell 120,000 laser printers during the coming year. Wanting to take advantage of the higher operating income per unit at Sandy, the company’s production manager has decided to manufacture 60,000 units at each plant, resulting in a plan in which Sandy operates at maximum capacity ( 200 units per day * 300 days) and Ogden operates at its normal volume ( 250 units per day * 240 days).

1. Calculate the breakeven point in units for the Ogden plant and for the Sandy plant.
2. Calculate the operating income that would result from the production manager’s plan to produce 60,000 units at each plant.
3. Determine how the production of 120,000 units should be allocated between the Ogden and Sandy plants to maximize operating income for Portal Corporation. Show yourcalculations.

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  • CreatedJanuary 15, 2015
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