Name:

Class Time:

Problem #$2$: Bond Office Service & Supply $($BOSS$)$ sells a variety of office equipment including the

Executive office chair. The Executive sells for $$220.$ Expected sales for next year are $4,000$ units $($sales

estimates made by management are usually within $10\%).$ BOSS is considering a change in its

manufacturing process. The accountants and engineers have developed the following two cost structures:

Current Manufacturing System: $$160$ variable cost per unit and $$210,000$ in fixed costs.

Alternate Manufacturing System: $$80$ variable cost per unit and $$532,000$ in fixed costs.

At what level of sales will BOSS be indifferent between the two manufacturing plans?

Indifference Point in units:

What are the break$-$even points in Sales Dollars $($$$)$ for the two manufacturing plans?

Current System break$-$even $ :

Alternate System break$-$even $ :

What are the margins of safety $($MOS$)$ of the two plans in dollars $($$$)$ and percentage $(\%)?$

Current System MOS $:

Alternate System MOS $ :

Current System MOS $\%$

Alternate System MOS $\%$ :

Which plan would you choose for BOSS? Why? What if sales are expected to increase? What if

sales are expected to decrease?

Name:

Class Time:

Problem #$2$: Bond Office Service & Supply $($BOSS$)$ sells a variety of office equipment including the

Executive office chair. The Executive sells for $$220.$ Expected sales for next year are $4,000$ units $($sales

estimates made by management are usually within $10\%).$ BOSS is considering a change in its

manufacturing process. The accountants and engineers have developed the following two cost structures:

Current Manufacturing System: $$160$ variable cost per unit and $$210,000$ in fixed costs.

Alternate Manufacturing System: $$80$ variable cost per unit and $$532,000$ in fixed costs.

At what level of sales will BOSS be indifferent between the two manufacturing plans?

Indifference Point in units:

What are the break$-$even points in Sales Dollars $($$$)$ for the two manufacturing plans?

Current System break$-$even $ :

Alternate System break$-$even $ :

What are the margins of safety $($MOS$)$ of the two plans in dollars $($$$)$ and percentage $(\%)?$

Current System MOS $:

Alternate System MOS $ :

Current System MOS $\%$

Alternate System MOS $\%$ :

Which plan would you choose for BOSS? Why? What if sales are expected to increase? What if

sales are expected to decrease?

$(($sshhooww wwoorrkk pplleeaassee$))$