Based on the projections in Exhibits 1 4 for the total resource utilization of t

Question

Based on the projections in Exhibits 1 4 for the total resource utilization of the WLRM and the BB products on their preexisting equipment, TRIM Inc. management is still trying to determine if the new exercise equipment should be produced.

Exhibit 1

Existing Cost Structure and Capacity Provided and Used and the Needs of the New Product, the WLRM Current cost, cost drivers and utilization of resources by Taylors Reduction Improvement Machines Inc. for production of the current product lines, (without the WLRM) are as follows:

Exhibit 1

Exhibit 2 The Composition of Each Activity

Maintenance Details (Exhibit 2)

Exhibit 3 Projected needs of the New Products

Exhibit 4 Detail on the Cost of Purchasing New Capacity

Determine what TRIM should do. Should they:

A. Determine the Target cost for the Waistline reduction machine?

a. Make 7,500 WLRMs?

b. Make 10,000 WLRMs?

c. Make 20,000 BBs?

d. Make the full demand for both the Bicep Builder (20,000 units) and the Waist Line Reduction Machine (10,000 units).

e. Build the full demand for the Bicep Builder (20,000 units) and the original lower volume for the Waist Line Reduction Machine (7,500 units).

f. Make some combination of the volumes of the WLRM and the BB based on a profit maximizing methodology. Double check the optimal solution with Linear Programming.

g. For each alternative include the impact on TRIMs profit. Rank the alternatives and indicate your choice. Be sure to explain the rationale behind your choice.

steps Activity Cost Cost Driver Practical Capacity of Resources Capacity Used Handing Material 200,000 # of moves 12,500 10,000 Setting Up Equipment 12,000,000 setup hours 12,000 10,000 Designing Processes and Products 180,000 types of products 12 8 Designing Packeting 240,000 types of products 12 8 Machining the Product 360,000 machine hours 300,000 240,000 Direct Labor 600,000 direct labor 20,000 18.500

Explanation / Answer

Based on the projections in Exhibits 1 4 for the total resource utilization of t

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