Week 4

Task 3: Monitor and review performance of business operation ( 10 marks)

You are an operations manager of a small manufacturing enterprise. Your owner intends to increase
the production capacity through the addition of new equipment. Two vendors have presented
proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable cost
for A is $12.00, and for B, $10.00. The revenue generated by each unit is $20.00.
a) What is the break-even point in units and dollars for proposal A?
b) What is the break-even point in units and dollars for proposal B?
c) If the expected volume is 15,000 units, which alternative should be chosen?

 

Task 4: Analytical case on performance review of operation ( 10 marks)

Joanna French is currently working a total of 12 hours per day to produce 240 dolls. She thinks that
by changing the paint used for the facial features and fingernails that she can increase her rate to 360
dolls per day. Total material cost for each doll is approximately $3.50; she has to invest $20 in the
necessary supplies (expendables) per day; energy costs are assumed to be only $4.00 per day; and
she thinks she should be making $10 per hour for her time.
Instructions: To Compute multifactor productivity, please refer to the following formula:
Productivity = (Units/Outputs) ÷ (Labour+ Material + Supplies + Energy)

Viewing this from a total (multifactor) productivity perspective, what is her productivity at
present and with the new paint?
Formula: Total outputs / Total inputs
Total input includes Units, Outputs, Labour + Material + Supplies + Energy

Present Productivity	Productivity using the new paint

How would total (multifactor) productivity change if using the new paint raised Ms. French’s material
costs by $0.50 per doll?