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Production cost ($/unit) $60.00 ry holding cost ($/unit) $2.30 Lost sales cost ($/unit) $95.00 Overtime cost ($/unit) $4.50 Undertime cost ($/unit) $3.00

Production cost ($/unit) $60.00 ry holding cost ($/unit) $2.30 Lost sales cost ($/unit) $95.00 Overtime cost ($/unit) $4.50 Undertime cost ($/unit) $3.00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Consider the following data for the Golden Beverages, a producer of two major products - Old Fashioned and Foamy Delite root beers. Production cost ($/unit) $60.00 Inventory holding cost ($/unit) $2.30 Lost sales cost ($/unit) $95.00 Overtime cost ($/unit) $4.50 Undertime cost ($/unit) $3.00 Rate change cost ($/unit) $8.00 Normal production rate (units) 1,500 Ending inventory (previous Dec.) 1,000 Note that the chase demand strategy has a total cost of $1,431,350.00. Calculate the total cost of two other production strategies that are proposed to the Golden Beverages. Round your answers to the nearest cent. Production strategy 1: Month Demand Production January 1,800 900 February 2,700 1,900 March 2,400 1,900 April 2,000 1,900 May 1,300 1,900 June 3,000 1,900 July 1,400 1,900 August 1,000 1,900 September 2,500 1,900 October 1,100 1,900 November 1,600 1,900 December 2,000 1,900 Total cost of production strategy 1: $
Transcribed Image Text:Consider the following data for the Golden Beverages, a producer of two major products - Old Fashioned and Foamy Delite root beers. Production cost ($/unit) $60.00 Inventory holding cost ($/unit) $2.30 Lost sales cost ($/unit) $95.00 Overtime cost ($/unit) $4.50 Undertime cost ($/unit) $3.00 Rate change cost ($/unit) $8.00 Normal production rate (units) 1,500 Ending inventory (previous Dec.) 1,000 Note that the chase demand strategy has a total cost of $1,431,350.00. Calculate the total cost of two other production strategies that are proposed to the Golden Beverages. Round your answers to the nearest cent. Production strategy 1: Month Demand Production January 1,800 900 February 2,700 1,900 March 2,400 1,900 April 2,000 1,900 May 1,300 1,900 June 3,000 1,900 July 1,400 1,900 August 1,000 1,900 September 2,500 1,900 October 1,100 1,900 November 1,600 1,900 December 2,000 1,900 Total cost of production strategy 1: $
Production strategy 2: Month Demand Production January 1,800 2,000 February 2,700 3,000 March 2,400 3,000 April 2,000 3,000 May 1,300 3,000 June 3,000 3,000 July 1,400 2,000 August 1,000 2,000 September 2,500 2,000 October 1,100 2,000 November 1,600 2,000 December 2,000 2,000 Total cost of production strategy 2: $ Select is the best production strategy for the Golden Beverages to minimize the total cost. Select Production strategy1 Production strategy 2 Chase demand strategy Check My Work (1 remaining)
Transcribed Image Text:Production strategy 2: Month Demand Production January 1,800 2,000 February 2,700 3,000 March 2,400 3,000 April 2,000 3,000 May 1,300 3,000 June 3,000 3,000 July 1,400 2,000 August 1,000 2,000 September 2,500 2,000 October 1,100 2,000 November 1,600 2,000 December 2,000 2,000 Total cost of production strategy 2: $ Select is the best production strategy for the Golden Beverages to minimize the total cost. Select Production strategy1 Production strategy 2 Chase demand strategy Check My Work (1 remaining)
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