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250 SWEET TREATS BAKERY (DECEMBER 2016)
Sweet Treats Bakery makes three types of cake: brownies, muffins and cupcakes. The costs,
revenues and demand for each of the three cakes are as follows:Brownies Muffins Cupcakes
Batch size (units) 40 30 20
Selling price ($ per unit) 1.50 1.40 2.00
Material cost ($ per unit) 0.25 0.15 0.25
Labour cost ($ per unit) 0.40 0.45 0.50
Overheads ($ per unit) 0.15 0.20 0.30
Minimum daily demand (units) 30 20 10
Maximum daily demand (units) 140 90 100The minimum daily demand is required for a long-term contract with a local café and must be
met.The cakes are made in batches using three sequential processes: weighing, mixing and
baking. The products must be produced in their batch sizes but are sold as individual units.
Each batch of cakes requires the following amount of time for each process:Brownies Muffins Cupcakes
Weighing (minutes) 15 15 20
Mixing (minutes) 20 16 12
Baking (minutes) 120 110 120The baking stage of the process is done in three ovens which can each be used for eight
hours a day, a total of 1,440 available minutes. Ovens have a capacity of one batch per bake,
regardless of product type.
Sweet Treats Bakery uses throughput accounting and considers all costs, other than material,
to be ‘factory costs’ which do not vary with production.On Wednesday, the mixing process is identified as the bottleneck process. On this day,
only 120 minutes in the mixing process are available.Assuming that Sweet Treats Bakery wants to maximise profit, what is the optimal
production plan for Wednesday?A 80 brownies, 30 muffins and 100 cupcakes
B 0 brownies, 90 muffins and 100 cupcakes
C 120 brownies, 0 muffins and 100 cupcakes
D 40 brownies, 60 muffins and 100 cupcakesHow to do this question?? I’m not getting the answer
On Friday, due to a local food festival at the weekend, Sweet Treats Bakery is
considering increasing its production of cupcakes. These cupcakes can be sold at the
festival at the existing selling price.
The company has unlimited capacity for weighing and mixing on Friday but its existing
three ovens are already fully utilised. Therefore in order to supply cupcakes to the
festival, Sweet Treats Bakery will need to hire another identical oven at a cost of $45
for the day.How much will profit increase by if the company hires the new oven and produces as
many cupcakes as possible?A $55.00
B $140.00
C $95.00
D $31.00And this one also I’m not getting the answer.
They should be ranked by the contribution / mixing minutes
For Brownies this is (50/20) = 2.50 so 2nd
For Muffins (37.5/16) = 2.34 so 3rd
For cupcakes (35/12) = 2.91 so 1stTherefore they are ranked Cupcakes, then Brownies, then Muffins.
However, of course, the maximum demand for cupcakes is 100.
This would ‘use up’ 100/20 x 12 = 60 minutes.They have to make 20 Muffins (this is the minimum demand) but because they have to be produced in batches, they must make at least 1 batch of 30 units. This ‘uses up’ another 16 minutes.
This leaves 120 – 60 – 16 = 44 minutes of mixing, which will be used to make Brownies and is enough to make 2 batches (taking 40 minutes). 2 batches is 80 units of Brownies.
So they produce 100 cupcakes, 80 brownies and 30 muffins
The second part:
Hiring another oven which it says is used for 8 hours
Your looking at only increasing cupcakesEach extra oven has the capacity of 8 hours
Each cupcake batch takes 2 hoursSo they can do an extra 4 batches of cupcakes
4 * throughput contribution of $35 = $ 140 more
Less the hire cost of $45 per day
So profit will increase by $95
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where did the 35 come from
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