Table 6.5 The T.H.King Company Has Introduced a New Product Line That

Short Answer

Table 6.5
The T.H.King Company has introduced a new product line that requires two work centers,A and B for manufacture.Work Center A has a current capacity of 10,000 units per year,and Work Center B is capable of 12,500 units per year.This year (year 0),sales of the new product line are expected to reach 10,000 units.Growth is projected at an additional 1,000 units each year through year 5.Pre-tax profits are expected to be $30 per unit throughout the 5-year planning period.Two alternatives are being considered:
-Expand both Work Centers A and B at the end of year 0 to a capacity of 15,000 units per year,at a total cost for both Work Centers of $200,000;