16) Bex, Inc, prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cocking. Because the demand has increased in recent months to 2,800 dozen units, ewanagement is considering adding another cooking station or else shaving the cooks stazt to work earlier, The monthly cost of operating the cooking station one moze hour ‘ach day is $2,400, The cost of adding another cooking station would add an average of S10 per hous. The cusrent operating houcs total aight hours a day, 22 days a month, The contribution mazgin of the finished products is currently $9 per dozen. laventocy carrying costs average $2.00 per dozen per month. Either the extra hour or the new cooking station would increase production by 20 dozen a day, with a long-run ncresse of S0 dozen units in finished goods inventory 10 250 dozen. Required: a. What is the fotal production per month if the change is made? >. What is the increase in the expected monthly product contribution for each of the possible changes? Assume long-run production equals sales. Answer: a. Total dozen per month - 2,800 + (22 x 20) - 3,240 b. feszent product contribution margi (2,800 x ) $22,401 Keareving costs (200 x $2) (400) Current_net_contribution jore hours: Expected product contribution margin (3,240 S) $25,921 Carving costs (280 « $2) $56 [Increased costs 2,400) (2.960) Expected net product contribution $20.96 Increase = $22,960 - $22,000 jew cooking station: [Expected product contribution margin (3.240 ) $25,921 Kcarrving costs (280 x $2) 536 [Increased costs ($10 x 22 x 8) L266 2.320] Expected net product contribution $23,600 Increase = $23,600 - $22,000 = $1,60(