Botany Frozen Foods Company Prepares Frozen Food for Fast-Food Restaurants

Botany Frozen Foods Company prepares frozen food for fast-food restaurants.It has two workstations: cooking and packing.The cooking station is limited by the cooking time of the food.Packing is limited by the speed of the workers.Packing normally waits on food from cooking.Because the demand has increased in recent months to 3200 dozen units,management is considering adding another cooking station or else having the cooks start work earlier.
The monthly cost of operating the cooking station one more hour each day is $2800.The cost of adding another cooking station would add an average of $10 per hour.The current operating hours total eight hours a day,22 days a month.The contribution margin of the finished products is currently $9 per dozen.Inventory carrying costs average $2.50 per dozen per month.Either the extra hour or the new cooking station would increase production by 20 dozen a day,with a long-run increase of 80 dozen units in finished goods inventory to 280 dozen.
Required:
a.What is the total production per month if the change is made?
b.What is the increase in the expected monthly product contribution for each of the possible changes? Assume long-run production equals sales.
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