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Production Mid-Term

Question 1:

Process Flow Diagram of CRU Rentals



Year 1996

 Total number of units = 14,405
 Utilization = 0.56 (56%)
 Revenue rate = No. of units * rent = 8,000 x 30 = $240,000/wk
 Depreciation = 14,405 x ($1000/156wks) = $92,340/wk
 Contribution Margin = $126,870/wk
 Variable Cost rate = 25 x 1,000 (R) + 25 x 1,000 (S) + 4x700x.85 + 150 x 405 = $113,130/wk

In 1997:

 Number of units on rent = 8,000
 Total number of units = 15,205
 Utilization = 0.53 (53%)
 Revenue = 4,800 x 30 + 3,200 x 35 = $256,000/wk
 Contribution Margin = $97,618/wk
 Depreciation = 15,205 x (1000/156) = $97,468/wk
 Cost = 25 x 1,400 (R) + 25 x 1,400 (S) + 4x980 x .85 + 150 x 567 = $158,382/wk

After Change in Demand to 1400 units/week:

The evaluation parameters as calculated in the new scenario:

 Number of units on rent = 8,000
......

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Approximate Word Count: 1919
Approximate Pages: 8 (250 words per double-spaced page)

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