Catawba Industrial Company – Group: 8C

Rishabh Jain (1801168)

Rutuja Suhas Borade (1801169)

S P kavya Shree (1801170)

Sakshi Verma (1801171)

Sanjay Sudhakar (1801172)

Q1. Is the company correct in its practice of not manufacturing standard model compressors on
Sunday because of the accounting loss incurred in each unit?

Ans. Total Loss, If company manufactures standard model compressor on Sundays : $900*4=$3,600

Total Loss, If company doesn’t manufacture standard model compressor on Sundays : $497*4=$1,988
(Depreciation)

Hence, company is correct in its practice of not manufacturing standard model compressors on Sunday
because of the accounting losses incurred in each unit.

Q2. If Marge McPhee decides to manufacture ten light weight compressors each week and to
sell them at a price of $ 8,000, how much better or worse off financially would Catawba be?

Ans. Yes, if McPhee decides to produce, 10 lightweight compressors each week, 17 standard
compressors can be produced. Based on whether lightweight compressors are produced on Saturday
or weekdays, the profit is $46032 or $45690. The profit without lightweight compressors is $37,800.
Hence, the company will be better of if they produce lightweight compressors.

Profit/Unit Total Profit

Lightweight units produced 10
Hours 62.5*10 625
2400-
Hours left 625 1775

Standard compressors that can be

produced 17775/10 ~17

Plan 1 Lightweight compressors on Saturday 6 $1,206.00 $7,236.00

Lightweight compressors on weekdays 4 $2,049.00 $8,196.00
Standard Compressors on Weekdays 17 $1,800.00 $30,600.00
Total profit $46,032.00
Plan 2
Standard Compressors on Saturday 4 $450.00 $1,800.00
Standard compressors on weekdays 13 $1,800.00 $23,400.00
Lightweight compressors on Weekdays 10 $2,049.00 $20,490.00
$45,690.00
Q3. What weekly production plan for standard and light weight compressors would result in
higher financial return for Catwabwa?

Ans. As can be seen from above table, if company decides not to produce on Saturday, the best
production plan 1

If company decides to produce on Sundays as well, per unit of lightweight compressors will give a profit
of $361. (Standard compressors can’t be produced on Sunday as each unit results in a loss)

As can be seen from the table in Q2 and table below, the best plan is to produce 6 Lightweight
compressors on Saturday, 4 in weekdays and 17 standard compressors in weekdays.

Profit/Unit Total Profit

Lightweight units produced 10
Hours 62.5*10 625
2800-
Hours left 625 2175

Standard compressors that can be produced 2175/10 ~21

Plan 1 Lightweight compressors on Sunday 6 $361.00 $2,166.00

Lightweight compressors on Saturday 4 $1,206.00 $4,824.00
Standard Compressors on Saturday 1 $450.00 $450.00
Standard Compressors on Weekdays 20 $1,800.00 $36,000.00
Total profit $43,440.00
Plan 2
Lightweight compressors on Sunday 4 $361.00 $1,444.00
Lightweight compressors on Saturday 6 $1,206.00 $7,236.00
Standard Compressors on Weekdays 20 $1,800.00 $36,000.00
Total profit $44,680.00