Help me understand how to do 5.2. Answers are below. Need help with the process.

*5.2 Reconsider the law firm of Exercise 5.1. Assume the prevailing revenues per shopping and medical proj- ects are $4000 and $5000 per project, respectively, and that out of pocket expenses associated with each proj- ect are negligible. The (fixed) cost of operating the office is $500,000 per month. a. What type of project is the most profitable? b. At the current product mix (50%-50%), how much contribution margin is generated ($ per day)? c. At the current product mix, what is the profit at capacity? d. At the current product mix, what is the value of hiring an extra Paralegal? How Toldatdongs rhong requirements (unit loads) for preparing a standard con- tract of each type are given in Table 5.8. Also listed are the number of professionals of each type and the num- ber of available hours per professional per day (the rest of time is taken by other office activities): Hours Available vrigav (hours per ele? No. Of Professionals professional per day) 8 *5.3 Three hairstylists, Franois, Bernard, and Mimi, run Fast Service Hair Salon for busy professionals in the Gold Coast area of downtown Chicago (see Figure 5.1). They stay open from 6:45 a.m. to 9:00 p.m. in order to accommodate as many people's work schedules as possible. They perform only shampooing and hairstyling activities. On average, it takes 10 minutes to shampoo, 15 minutes to style the hair and 5 minutes to bill the customer. When a Exercises 51 A law firm specializes in the issuance of insurance poli- cies covering large commercial real estate projects. The projects fall into two categories: shopping centers, and medical complexes. The typical work involved in each transaction is quite predictable and repetitive. The time Table 5.8 Data for law Firm Unit Load Shopping (hours per contract) Unit Load Medical (hours per contract) Paralegal 6 Tax lawyer Senior partner For the month of November, 2010, the firm has gener- ated the 150 orders, 75 of each type. Assume one month equals 20 days. a. What is the effective capacity of the process (con- tracts per day)? b. Can the company process all 150 cases in November? c. If the firm wishes to process all the 150 cases avail- able in November, how many professionals of each 00 = a. The capacity of shopping cases is 24/4 = 6 cases per day and the capacity medical cases is 24/6= 4 cases per day. The contribution from shopping cases is 6 x 4000 $24,000 per day and from medical cases is 4 x 5000 = $20,000 per day. Shopping is more profitable. AD10929 b. The capacity is 4.8 cases per day, and the margin per unit is 0.5 X 5000+ 0.5 x 4000 = $4500 per case. The margin at capacity is 4.8 X 4500 = $21,600 per day The profit at capacity is (21,600 20) 500,000 = -68,000 (a loss) - c. d. An extra paralegal will increase the capacity by 120/5= 24 cases per month. This is worth 24 X 4500 $108,000 per month (less the cost of the paralegal) =