Solve these problems and upload your solution to Canvas. You can solve them $$by hand$$ or

using Excel. The use of Excel for Problem $3$ is highly encouraged.

Show all your work $($typed in the document or pasting a scanned image of your handwritten

solution$).$ Save your solution document in a $.$pdf file and upload it to Canvas along with an

Excel file for calculations performed in Excel.

Problem $1(6$ points$)$

In a job shop, effective capacity is only $40$ percent of design capacity, and actual output is $75$

percent of effective capacity. What design capacity would be needed to achieve an actual output of

$18$ jobs per week?

Problem $2(8$ points$)$

A small firm intends to increase the capacity of a bottleneck operation by adding a new machine.

Two alternatives, A and B$,$ have been identified, and the associated costs and revenues have been

estimated. Annual fixed costs would be $$36,000$ for A and $$31,000$ for B; variable costs per unit

would be $$7$ for A and $$11$ for B; and revenue per unit would be $$17.$

a$.$ Determine each alternative$$s break$-$even point in units. Add your results into the provided table.

QBEPA units

QBEPB units

b$.$ At what volume of output would the two alternatives yield the same profit?

c$.$ If expected annual demand is $14,000$ units, which alternative would yield the higher profit?

Problem $3(8$ points$)$

Note: You are encouraged to use Excel to solve this problem.

A manager is trying to decide whether to purchase a certain part or to have it produced internally.

Internal production could use either of two processes. One would entail a variable cost of $$17$ per

unit and an annual fixed cost of $$200,000$; the other would entail a variable cost of $$14$ per unit and

an annual fixed cost of $$240,000.$ Three vendors are willing to provide the part. Vendor A has a price

of $$20$ per unit for any volume up to $30,000$ units. Vendor B has a price of $$22$ per unit for demand of

$1,000$ units or less, and $$18$ per unit for larger quantities. Vendor C offers a price of $$21$ per unit for

the first $1,000$ units, and $$19$ per unit for additional units.

a$.$ If the manager anticipates an annual volume of $10,000$ units, which alternative would be best

from a cost standpoint?

b$.$ For $65,000$ units, which alternative would be best?