1. Determine the utilization and the efficiency:

A loan processing operation processes an average of 12 loans per day. The operation has a design capacity of 18 loans per day and an effective capacity of 16 loans per day.

[Hint: Please read Example on page 193 in the text book.]

Please solve the following problem related to cost-volume analysis

2. A producer of pens has fixed costs of $18,000 per month which are allocated to the operation and variable costs are $1.80 per pen.

(a) Find the break-even quantity if pens sell at $2.3 each.

(b) Find the profit if the company produces 42,000 pens and pens sell at $2.3 each?

[Hint: Please read Example 3 on page 207-208 and Problems 2-3 on page 213.]

3. A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motor for the appliance from a vendor at ten dollars each or to produce them in-house. The in-house process would have an annual fixed cost of $220,000 and a variable cost of eight dollars per unit. Determine the range of annual volume for which each of the alternatives would be best.