Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month.Following is other critical data: Production cost per unit = $50
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $300
Firing cost per worker = $200
Beginning number of workers = 16
Each worker can produce = 50 units per month.LEVEL PLAN What is the total cost of the level plan?
A)$250,000
B)$260,700
C)$252,700
D)$258,000

Question

Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month.Following is other critical data: Production cost per unit = $50
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $300
Firing cost per worker = $200
Beginning number of workers = 16
Each worker can produce = 50 units per month.LEVEL PLAN  What is the total cost of the level plan?
A)$250,000 
B)$260,700 
C)$252,700 
D)$258,000

Quizplus · Accepted Answer

See completed plan below.LEVEL PLAN Inventory carrying cost = 800 units × $10 = $8,000Hiring cost = 9 hires × $300 = $2,700Regular production cost = 5,000 units × $50 = $250,000Total cost = $8,000 + $2,700 + $250,000 = $260,700

Wiedmer Corporation Is Preparing an Aggregate Production Plan for Widgets