The owner of Banner Tech, a printing company, is planning direct labor needs for the upcoming year. The owner has provided you with the following information for next year’s plans:
|
|
One |
Two |
Three |
Four |
|
|
|
Color |
Color |
Color |
Color |
Total |
|
Number of banners |
100 |
150 |
200 |
400 |
850 |
Each color on the banner must be printed one at a time. Thus, for example, a four color banner will need to be run through the printing operation four separate times. The total production volume last year was 425 banners, as shown below.
|
|
One |
Two |
Three |
|
|
|
Color |
Color |
Color |
Total |
|
Number of banners |
100 |
125 |
200 |
425 |
As you can see, the four color banner is a new product offering for the upcoming year. The owner believes that the expected 425 unit increase in volume from last year means that direct labor expenses should increase by 100% (425/425). What do you think?