6 times $4,300,000 + 0.4 times $2,400,000= $3,540,000
This means that the expected net profit will be $540,000
Question 4 a) I am assuming that the greatest advantage of the work-in-process inventory is that the production is always associated and correlated with the supply of raw materials. By this, I mean that producing on stock, with larger quantities of products being manufactured without having necessarily an immediate demand or order for them will make the supply chain more efficient and will allow the company to produce at what is likely to be lower unit costs. It will also be using the labor factor more efficiently, because the workforce will not remain stagnated without clients, but will still produce, with these products being sold to clients in the future.
A b) However, on the other hand, the work in process inventory proposes high levels of inventory which increases both the overall costs for the company and the additional potential risks. In terms of costs, this is obvious: larger amounts of stock imply that the company needs to have larger storage areas, as well as additional labor and equipment to handle these stocks.
It is difficult to decide whether to go for the work in process or simply reduce inventory as much as possible and attempt the use of a just in time type of inventory management.
A b) i. alt 1: Production = Output/time = 10 projects/8 hours = 1.25
Alt 2: There will be 24 operations of data gathering and 16 operations of analysis, which means that there will be a total of 16 projects being completed in one day.
Production = 16 projects/8 = 2 ii. alt 1: productivity is the same as the production = 1.25 alt 2: here the number of hours is 16 hours (2 laborers). At the same time, there will be 24 operations of data gathering and 16 operations of analysis, which means that there will be a total of 16 projects being completed in one day.
Then productivity = output/total number…
