Central trmica, Inc., produces the same power generator in two Spanish plants, a new plant in Los

Central térmica, Inc., produces the same power generator in two Spanish plants, a new plant in Los Barrios and an older plant in Ascó. 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 Los Barrios and $10.00 per unit in Ascó.
Central térmica, Inc., is expected to produce and sell 240,000 power generators during the coming year. Wanting to take advantage of the higher operating income per unit at Ascó, the company’s production manager has decided to manufacture 120,000 units at each plant, resulting in a plan in which Ascó operates at maximum capacity (400 units per day X 300 days) and Los Barrios operates at its normal volume (500 units per day X 240 days).

Required

1. Calculate the breakeven point in units for the Los Barrios plant and for the Ascó plant.
2. Calculate the total operating income that would result from the production manager’s plan to produce 120,000 units at each plant.
3. Determine how the production of 240,000 units should be allocated between the Los Barrios and Ascó plants to maximize operating income for Central térmica, Inc. Show your calculations.

Transcribed Image Text:

Home Insert Page Layout A 1 2 Selling price 3 Variable manufacturing cost per unit 4 Fixed manufacturing cost per unit 5 Variable marketing cost per unit 6 Fixed marketing cost per unit 7 Total cost per unit 8 Operating income per unit 9 Production rate per day 10 Normal annual capacity usage 11 Maximum annual capacity Formulas Data Review B Los Barrios $80.00 35.00 20.00 30.00 $200.00 165.00 $ 35.00 500 units 240 days 300 days View D Ascó $100.00 27.00 25.00 24.00 E $200.00 175.00 $ 25.00 400 units 240 days 300 days