Assume that all facts in Case 46 still hold except that the practical capacity of the machinery was 20,000 hours instead of 10,000 hours.
a. Compute the unit costs for each product: Diet, Regular, Cherry, and Grape colas.
b. What is the cost of unused capacity? What do you recommend that Rockness Bottling do with this unused capacity?
c. Now assume that Rockness considers producing a fifth product: Vanilla cola. Because Vanilla cola is in high demand in Rockness Bottling's market, assume that it would use 10,000 hours of machine time to make 100,000 units. (Recall that the machine capacity in this case is 20,000 hours, while Diet, Regular, Cherry, and Grape consume only 10,000 hours.) Vanilla cola's per-unit costs would be identical to those of Diet cola except for the machine usage costs. What would be the cost of Vanilla cola? Calculate on a per-unit basis, then in total.