Table 6.8 The Summerville Vitamin Company Manufactures Bottles of Animal-Shaped Chewable Vitamins

Table 6.8
The Summerville Vitamin Company manufactures bottles of animal-shaped chewable vitamins for children.This product line requires two work centers,tablet manufacturing and packaging.The tablet manufacturing work center has a current capacity of 140,000 bottles per month,and packaging is capable of 100,000 units per month.This year (year 0),monthly sales of the product line are expected to reach 100,000 units.Growth per month is projected at an additional 25,000 units through year 4 (i.e. ,125,000 per month in year #1,150,000 per month in year #2,etc. ).Pre-tax profits are expected to be $5 per unit throughout the 4-year planning period.Two alternatives are being considered:
-Expand both tablet manufacturing and packaging at the end of year 0 to a capacity of 200,000 units per month,at a total cost for both work centers of $2,250,000;