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Custom Bookshelf Cost Analysis

The Woodworks Company produces custom wood furniture like bookshelves made from teak or mahogany. The table shows that a teak bookshelf requires 30 board-feet of teak costing $450 per board-foot along with 16 labor hours costing $1,175 per hour. It also lists the anticipated annual increases of 2.4% for teak, 1.7% for mahogany, and 1.5% for labor. The managers want to examine how bookshelf costs may change in future years given different growth rates for wood and labor costs.

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yuval sharma
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9 views1 page

Custom Bookshelf Cost Analysis

The Woodworks Company produces custom wood furniture like bookshelves made from teak or mahogany. The table shows that a teak bookshelf requires 30 board-feet of teak costing $450 per board-foot along with 16 labor hours costing $1,175 per hour. It also lists the anticipated annual increases of 2.4% for teak, 1.7% for mahogany, and 1.5% for labor. The managers want to examine how bookshelf costs may change in future years given different growth rates for wood and labor costs.

Uploaded by

yuval sharma
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

The Woodworks Company produces a variety of custom-designed wood furniture for its

customers. One of the most popular furniture is a bookshelf, made from either teak or mahogany.

The company knows that wood prices and labor costs are likely to increase in the future. The

table below shows the number of board-feet and labor hours required for a bookshelf, the current

costs per board-foot and labor hour, and the anticipated annual increases in these costs.

Table 1. Input Data for Manufacturing a Bookshelf


Resource Teak Mahogany Labor
Required per bookshelf 30 30 16
Current Unit Cost 450 325 1175
Anticipated annual cost increase 2.4% 1.7% 1.5%

The mangers at Woodworks would like to experiment with the growth rates in wood and labor

costs to see how the costs of the bookshelves may vary in the next few years.

(Source: Practical Management Science, Winston and Albright)

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