EXERCISE B-2 Volume Trade-Off Decision [LO2] Heritage Watercraft makes reproductions of classic wooden boats. The bottleneck...

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EXERCISE B-2 Volume Trade-Off Decision [LO2] Heritage Watercraft makes reproductions of classic wooden boats. The bottleneck in the produc- tion process is fitting wooden planks to build up the curved sections of the hull. This process requires the attention of the shop's most experienced craftsman. A total of 1,800 hours is avail- able per year in this bottleneck operation. Data concerning the company's four products appear below: Unit contribution margin.. Annual demand (units).. Hours required in the bottleneck operation per unit.. Adirondack $485 80 5 1. 2. 3. Lake Huron $268 120 4 Profitability Analysis Oysterman $385 100 7 Voyageur $600 140 8 No fixed costs could be avoided by modifying how many units are produced of any product or even by dropping any one of the products. Required: Is there sufficient capacity in the bottleneck operation to satisfy demand for all products? What is the optimal production plan for the year? What would be the total contribution margin for the optimal production plan you have proposed? 95 EXERCISE B-2 Volume Trade-Off Decision [LO2] Heritage Watercraft makes reproductions of classic wooden boats. The bottleneck in the produc- tion process is fitting wooden planks to build up the curved sections of the hull. This process requires the attention of the shop's most experienced craftsman. A total of 1,800 hours is avail- able per year in this bottleneck operation. Data concerning the company's four products appear below: Unit contribution margin.. Annual demand (units).. Hours required in the bottleneck operation per unit.. Adirondack $485 80 5 1. 2. 3. Lake Huron $268 120 4 Profitability Analysis Oysterman $385 100 7 Voyageur $600 140 8 No fixed costs could be avoided by modifying how many units are produced of any product or even by dropping any one of the products. Required: Is there sufficient capacity in the bottleneck operation to satisfy demand for all products? What is the optimal production plan for the year? What would be the total contribution margin for the optimal production plan you have proposed? 95

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1 Yes there is sufficient capacity in the bottleneck opera... View the full answer