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12-28 Selection of most profitable products. Isochlorine is produced in a chemical process that is very threatening to the environment. As a result of this, the government has limited the yearly production. Company Soleil uses isochlorine to produce four cosmetic products A, B, C, and D. Soleil has an inventory of 2,000 kg of isochlorine at a value of $20,000. As a result of production restrictions imposed on their supplier, Soleil will not be able to purchase ad- ditional isochlorine during the coming period. Although Soleil, by means of its commercial campaign, suggests that its main goal is to let people experience the sanitary effects of its cosmetic products, the management is only interested in profit maximization. The management of Soleil must decide how to use the scarce material. The following information is available concerning the next period:

12-28 Selection of most profitable products. Isochlorine is produced in a chemical process that is very threatening to the environment. As a result of this, the government has limited the yearly production. Company Soleil uses isochlorine to produce four cosmetic products A, B, C, and D. Soleil has an inventory of 2,000 kg of isochlorine at a value of $20,000. As a result of production restrictions imposed on their supplier, Soleil will not be able to purchase ad- ditional isochlorine during the coming period. Although Soleil, by means of its commercial campaign, suggests that its main goal is to let people experience the sanitary effects of its cosmetic products, the management is only interested in profit maximization. The management of Soleil must decide how to use the scarce material. The following information is available concerning the next period:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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12-28 Selection of most profitable products. Isochlorine is produced in a chemical process that is very threatening to the environment. As a result of this, the government has limited the yearly production. Company Soleil uses isochlorine to produce four cosmetic products A, B, C, and D. Soleil has an inventory of 2,000 kg of isochlorine at a value of $20,000. As a result of production restrictions imposed on their supplier, Soleil will not be able to purchase ad- ditional isochlorine during the coming period. Although Soleil, by means of its commercial campaign, suggests that its main goal is to let people experience the sanitary effects of its cosmetic products, the management is only interested in profit maximization. The management of Soleil must decide how to use the scarce material. The following information is available concerning the next period: 24 CHAPTER 12 DECISION MAKING AND RELEVANT INFORMATION NITI Selling Price per Labor-Hours per Material per Unit (Grams) Product Sales Unit Unt $ 70 $ 60 A 3,000 1.0 500 В 8,000 1.2 300 C 4,000 $100 2.0 600 5,000 $ 80 1.0 800 The labor tariff per hour is $30. Labor costs are linear variable. Sales provision is 10% of the selling price. Which products must Soleil produce during the next period? What is the contribution margin for the Required
Transcribed Image Text:12-28 Selection of most profitable products. Isochlorine is produced in a chemical process that is very threatening to the environment. As a result of this, the government has limited the yearly production. Company Soleil uses isochlorine to produce four cosmetic products A, B, C, and D. Soleil has an inventory of 2,000 kg of isochlorine at a value of $20,000. As a result of production restrictions imposed on their supplier, Soleil will not be able to purchase ad- ditional isochlorine during the coming period. Although Soleil, by means of its commercial campaign, suggests that its main goal is to let people experience the sanitary effects of its cosmetic products, the management is only interested in profit maximization. The management of Soleil must decide how to use the scarce material. The following information is available concerning the next period: 24 CHAPTER 12 DECISION MAKING AND RELEVANT INFORMATION NITI Selling Price per Labor-Hours per Material per Unit (Grams) Product Sales Unit Unt $ 70 $ 60 A 3,000 1.0 500 В 8,000 1.2 300 C 4,000 $100 2.0 600 5,000 $ 80 1.0 800 The labor tariff per hour is $30. Labor costs are linear variable. Sales provision is 10% of the selling price. Which products must Soleil produce during the next period? What is the contribution margin for the Required
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