Table A: Machine-hours: Requirements and Availability

Total
Machines-
Machine-Hours Required per Truck Hours
Department Model 101 Model 102 Available
Engine Assembly 1.00 2.00 4000
Metal Stamping 2.00 2.00 6000
Model 101 Assembly 2.00 0.00 5000
Model 102 Assembly 0.00 3.00 4500

Table C: Overhead Budget for 1988

Total Overhead per Fixed Overhead per Variable Overhead/Unit
Department Month ($ million)a Month ($ million)b Model 101
Engine Assembly 9.80 1.70 $ 2,100.00
Metal Stamping 8.10 2.70 $ 2,400.00
Model 101 Assembly 6.20 2.70 $ 3,500.00
Model 102 Assembly 5.25 1.50 $ -
29.35 8.60 $ 8,000.00
a. Based on monthly production rate of 1,000 Model 101 trucks and 1,500 Model 102 trucks.
b. Fixed overhead cost was distributed to the two truck models in proportion to degree of capacity utilization

Selling Price of Model 101 $ 39,000.00

Selling Price of Model 102 $ 38,000.00
 Table B: Standard Product Cost

Model 101 Model 102

Direct Material $ 24,000.00 $ 20,000.00
Direct Labour
Engine Assembly $ 1,200.00 $ 2,400.00
Metal Stamping $ 800.00 $ 600.00
Final Assembly $ 2,000.00 $ 1,500.00
$ 4,000.00 $ 4,500.00
Overhead a

Variable Overhead/Unit Engine Assembly $ 2,525.00 $ 4,850.00

Model 102 Metal Stamping $ 3,480.00 $ 3,080.00
$ 4,000.00 Final Assembly $ 6,200.00 $ 3,500.00
$ 2,000.00 $ 12,205.00 $ 11,430.00
$ - Total $ 40,205.00 $ 35,930.00
$ 2,500.00 a. See Table C
$ 8,500.00
 S.P. M101 $ 39,000.00 S.P. M102 $ 38,000.00
1(b) The best product mix if engi
V.C. M101 $ 36,000.00 V.C. M102 $ 33,000.00 1,999 Model 101 trucks and
Contribution $ 3,000.00 Contribution $ 5,000.00
1(c ) If the capacity were to be in
X1 = No. of Model 101 100 times that in part (b).
X2 = No. of Model 102
1(d) 500 units of engine assembl
Variables additional unit of capacity.
X1 2000
1(a) X2 1000

Maximize 3000X1+5000X2 $ 11,000,000.00

Constraints
EA X1 + 2X2 4000 <= 4000
MS 2X1 + 2X2 6000 <= 6000
M101 A 2X1 4000 <= 5000
M102 A 3X2 3000 <= 4500
The best product mix if engine assembly were raised by 1 unit fromm 4,000 to 4,001 machine-hours is
1,999 Model 101 trucks and 1,001 Model 102 trucks. The extra unit of capacity is worth $2,000.

If the capacity were to be increased from 4,000 to 4,100, the contribution increases by $2,00,000 which is
100 times that in part (b).

500 units of engine assembly capacity needs to be added before there is a change in the value of an
additional unit of capacity.
S.P. M101 $ 39,000.00 S.P. M102
V.C. M101 $ 36,000.00 V.C. M102
Contribution $ 3,000.00 Contribution

X1 = No. of Model 101

X2 = No. of Model 102

Variables
X1 2000
X2 1000

Maximize 11000000 $ 11,000,000.00

Constraints
EA 4000 4000 <=
MS 6000 6000 <=
M101 A 4000 4000 <=
M102 A 3000 3000 <=
$ 38,000.00
$ 33,000.00
$ 5,000.00

4000
6000.00
5000
4500
Microsoft Excel 15.0 Sensitivity Report
Worksheet: [Merton Truck Company.xlsx]Q1
Report Created: 09-08-2016 22:43:35

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$10 X1 2000 0 3000 2000 500
$C$11 X2 1000 0 5000 1000 2000

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$16 X1 + 2X2 4000 2000 4000 500 500
$D$17 2X1 + 2X2 6000 500 6000 500 1000
$D$18 2X1 4000 0 5000 1E+030 1000
$D$19 3X2 3000 0 4500 1E+030 1500
 Contribution M101 $ 3,000.00
Contribution M102 $ 5,000.00
Contribution M103 $ 2,000.00

X1 = No. of Model 101

X2 = No. of Model 102
X3 = No. of Model 103

Variables
X1 2000
3 X2 1000
X3 0

Maximize 3000X1+5000X2+2000X3 $ 11,000,000.00

Constraints
EA X1+2X2+0.8X3 4000 <= 4000
MS 2X1+2X2+1.5X3 6000 <= 6000
M101 A 2X1+X3 4000 <= 5000
M102 A 3X2 0 <= 4500
Microsoft Excel 15.0 Sensitivity Report
Worksheet: [Merton Truck Company.xlsx]Q3
Report Created: 09-08-2016 23:14:41

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$11 X1 2000 0 3000 2000 500
$C$12 X2 1000 0 5000 1000 2000
$C$13 X3 0 -350 2000 350 1E+030

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$18 X1+2X2+0.8X3 4000 2000 4000 2000 500
$D$19 2X1+2X2+1.5X3 6000 500 6000 500 2000
$D$20 2X1+X3 4000 0 5000 1E+030 1000
$D$21 3X2 0 0 4500 1E+030 4500