Blanchard

Assuming sales would trend for the first four months of 1972 follow for the rest of 1972
Sales prediction for annual demand for

year 1972
Total
Sales
Feb
Mar
Apr
May
1971
1972
128
210
136
303
233
275
219
463
716
1251
1971
1972
51
166
52
142
74
133
157
213
334
654
79
82
82
68
151
66
66
38
378
254
163
177
180
163
198
162
183
256
724
758
10
11
34
28
44
61
26
55
114
155
Percentage
Change over
1971
Annual
Demand
Vodka
74.72
2455
4289
95.81
1421
2782
-32.80
800
538
4.70
3096
3241
35.96
449
610
Gin
Scotch
1971
1972
Whiskey
1971
1972
Rum
1971
1972
Size changeover cost = (cost of resetting all machinery for change in bottle size/ avg. no. of
different items of given size processed between size changeover)
= 23000 / (52*7*10)
= $6.3186 per changeover
Label changeover cost = Labor cost incurred while label changeover process
= (23000*0.5*8)/(52*7) + 5*2.5*0.5
= $10.2 per labor changeover
Assumption each working day is of 8 hrs.
Order Processing cost = 18000/ 350
= $51.43 per order
Setup cost (S):
All figures in $
Blanchard's 80
proof Vodka
Blanchard's 80
proof Gin
MacCoy &
MacCoy 86
proof Scotch
Triple 7 86
proof Blended
Whiskey
Blanchard's 80
proof Ron
Cores Rum
Blendin Size
g Setup changeov
Cost
er cost
Labor
Order
changeov processi
er cost
ng cost
Total
setup
cost (S)
1.15
6.32
10.2
51.43
69.10
1.08
6.32
10.2
51.43
69.03
3.24
6.32
10.2
51.43
71.19
2.62
6.32
10.2
51.43
70.57
2.33
6.32
10.2
51.43
70.28
Fixed overhead allocation = total company fixed overhead for the year/ no. of cases sold per yr.
We calculate total fixed overhead as per data given for 1969.
Total fixed overhead = 1.31*(2455+1421+800+3096+449) = $ 10769.51
Since fixed overhead remains constant from year to year
Now for year 1972,
Fixed overhead allocation = 10769.51 / 11461= $ 0.9396
Calculations for Unit cost

Blanchar
d's 80
Blancha
rd's 80
MacCo
y&
MacCo
y
Triple 7
86
Blancha
rd's 80
Proof
Blende
d
Whiske
y
Proof
Ron
Cores
Rum
All figures in $
Materials
beverage
Materials
packaging
Total Material cost
Bottling labor
Fixed overhead
allocation
Variable overhead
Proof
Vodka
Proof
Gin
86
Proof
Scotch
0.93
1.08
4.46
2.52
2.74
1.27
1.27
1.27
1.27
1.27
2.2
0.1
2.35
0.1
5.73
0.1
3.79
0.1
4.01
0.1
0.94
0.94
0.94
0.94
0.94
0.5
0.5
0.5
0.5
0.5
27.09
25.2
Customs duty
Federal distilled
spirits tax
Federal
rectification tax
Total Unit Cost (C )
1.55
25.2
25.2
27.09
0.76
31.14
31.44
41.64
36.97
34.76
Product
Blanchard
's 80
proof
Vodka
Blanchard
's 80
proof Gin
MacCoy &
MacCoy
86 proof
Scotch
Triple 7
86 proof
Blended
Whiskey
Blanchard
's 80
proof Ron
Cores
Rum
Annual Setup
Deman cost
d (R )
(S )
Unit
Cost
(C )
Carrying
cost
percent
age (K )
New EOQ
New
ROP
2RS
CK
3.5
52
EOQ
as
per
1969
ROP
as
per
1969
4289
69.10
31.14
11.5
407
289
327
165
2782
69.03
31.44
11.5
326
187
248
96
538
71.19
41.64
11.5
126
36
170
54
3241
70.57
36.97
11.5
328
218
346
208
610
70.28
34.76
11.5
146
41
137
30

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Assuming sales would trend for the first four months of 1972 follow for the rest of 1972

Sales prediction for annual demand for

= $51.43 per order

Setup cost (S):

Calculations for Unit cost

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