quiz1
Operations Management, FARE*3310 - Winter 2014: Assignment 1
This assignment contains FOUR questions, each with subparts. You are required to answer all questions. Total marks are out of 70. Be sure to show your work. If you have to, make reasonable assumptions, but explain/justify any assumptions made in your answers. Please answer your calculations to Three decimal places (e.g., 0.002). Note that the cases in this assignment are fictitious and plausible. Please note that late assignments will be given a zero grade.
Due Date: Friday, February 07, 2014, beginning of the class. This assignment makes up 7 % of your total mark.
1. [Chapter 1: 10 points]. A local family bakery currently sells 5 birthday, 2 wedding, and 3 speciality cakes each week for $50, $150, and $100 each, respectively. Suppose the bakery uses two inputs: labour and raw materials.
The cost of labour is $50 per hour including benefits. It takes 90 minutes to produce 5 birthday cakes, 240 minutes to produce 2 wedding cakes, 60 minutes to produce 3 speciality cakes. The bakery’s multifactor productivity ratio is 1.25, and each type of cake has the same per unit cost for ingredients (i.e., raw materials).
a. Calculate the total cost of ingredients.
5 Birthday cakes x $50 per cake = $250
2 Wedding cakes x $150 per cake = $300
3 Speciality cakes x $100 per cake = $300
Total monthly revenue = $850
Multifactor productivity = Output/input
1.25 = $850/x => x = $850/1.25 = $680 (x is total cost)
Total labour costs = (90mins+240mins+60min)*$50/60mins = $325
Total ingredient cost = $680 - $325 = $355
b. What is the bakery’s weekly total profit/loss from cake sales? What is the bakery’s weekly profit/loss from each cake type? Is there a type of cake the bakery should stop selling? Why?
Total Profit/loss = $850 - $680 = $170 per week
Total cost for Birthday cakes = $75 +$355*5/10 = $252.5
Total cost for Wedding cakes = $200+$355*2/10 = $271.0
Total cost for Speciality cakes =$50
This assignment contains FOUR questions, each with subparts. You are required to answer all questions. Total marks are out of 70. Be sure to show your work. If you have to, make reasonable assumptions, but explain/justify any assumptions made in your answers. Please answer your calculations to Three decimal places (e.g., 0.002). Note that the cases in this assignment are fictitious and plausible. Please note that late assignments will be given a zero grade.
Due Date: Friday, February 07, 2014, beginning of the class. This assignment makes up 7 % of your total mark.
1. [Chapter 1: 10 points]. A local family bakery currently sells 5 birthday, 2 wedding, and 3 speciality cakes each week for $50, $150, and $100 each, respectively. Suppose the bakery uses two inputs: labour and raw materials.
The cost of labour is $50 per hour including benefits. It takes 90 minutes to produce 5 birthday cakes, 240 minutes to produce 2 wedding cakes, 60 minutes to produce 3 speciality cakes. The bakery’s multifactor productivity ratio is 1.25, and each type of cake has the same per unit cost for ingredients (i.e., raw materials).
a. Calculate the total cost of ingredients.
5 Birthday cakes x $50 per cake = $250
2 Wedding cakes x $150 per cake = $300
3 Speciality cakes x $100 per cake = $300
Total monthly revenue = $850
Multifactor productivity = Output/input
1.25 = $850/x => x = $850/1.25 = $680 (x is total cost)
Total labour costs = (90mins+240mins+60min)*$50/60mins = $325
Total ingredient cost = $680 - $325 = $355
b. What is the bakery’s weekly total profit/loss from cake sales? What is the bakery’s weekly profit/loss from each cake type? Is there a type of cake the bakery should stop selling? Why?
Total Profit/loss = $850 - $680 = $170 per week
Total cost for Birthday cakes = $75 +$355*5/10 = $252.5
Total cost for Wedding cakes = $200+$355*2/10 = $271.0
Total cost for Speciality cakes =$50