4-71. Optimum Product Mix Austin Enterprises makes and sells three types of dress shirts. Management is trying to determine the most profitable mix. Sales prices, demand, and use of manufacturing inputs follow. Sales price. Maximum annual demand (units) Input requirement per unit Direct material Direct labor. Annual fixed costs Manufacturing.. Marketing Administration. Basic **** $30 20,000 5 yards 7 hours Costs Variable costs Materials. Direct labor. Factory overhead.. $4 per direct labor-hour Marketing 10% of sales price Classic Formal $64 $190 10,000 3 yards 2 hours $20 per yard $16 per hour $36,000 $8,000 $30,000 30,000 6 yardsbong bon 7 hours The company faces two limits: (1) the volume of each type of shirt that it can sell (see maximum annual demand) and (2) 30,000 direct labor-hours per year caused by the plant layout. Required Show supporting data in good form. How much operating profit could the company earn if it were able to satisfy the annual demand? 5 Which of the

4-71. Optimum Product Mix Austin Enterprises makes and sells three types of dress shirts. Management is trying to determine the most profitable mix. Sales prices, demand, and use of manufacturing inputs follow. Sales price. Maximum annual demand (units) Input requirement per unit Direct material Direct labor. Annual fixed costs Manufacturing.. Marketing Administration. Basic **** $30 20,000 5 yards 7 hours Costs Variable costs Materials. Direct labor. Factory overhead.. $4 per direct labor-hour Marketing 10% of sales price Classic Formal $64 $190 10,000 3 yards 2 hours $20 per yard $16 per hour $36,000 $8,000 $30,000 30,000 6 yardsbong bon 7 hours The company faces two limits: (1) the volume of each type of shirt that it can sell (see maximum annual demand) and (2) 30,000 direct labor-hours per year caused by the plant layout. Required Show supporting data in good form. How much operating profit could the company earn if it were able to satisfy the annual demand? 5 Which of the

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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Practice problem Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $3.00 per linear foot and full cost of $4.00. Comparable quality wood sells on the open market for $9.00 per linear foot.1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber.2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity.
Define the following terms with example. RELEVANT COSTSUNK COSTOPPORTUNITY COSTAVOIDABLE AND UNAVOIDABLE COSTINCREMENTAL COSTBREAK-EVEN POINT(B)KPR manufactures installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: In RsAmount Sales 80,000 Variable expenses 32,000 Contribution margin 48,000 Fixed expenses -38,000 Net operating income 10,000 Required:Compute the company’s degree of operating leverage.Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales.Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 5% increase in sales.
Please answer parts 5-8 according to the images attached below. Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials ? $ 5.00 per yard $ ? Direct labor ? ? ? Variable manufacturing overhead ? $ 2 per direct labor-hour ? Total standard cost per unit $ ? Overhead is applied to production on the basis of direct labor-hours. During March, 780 backpacks were manufactured and sold. Selected information relating to the month’s production is given below: Materials Used Direct Labor Variable Manufacturing Overhead Total standard cost allowed* $ 15,600 $ 13,104 $ 2,496 Actual costs incurred $ 13,112 ? $ 5,491 Materials price variance ? Materials quantity variance $ 790 U Labor rate variance ? Labor efficiency variance ? Variable…
3. JJ Manufacturing builds and sells switch harnesses for glove boxes. The sales price and variable cost for each follows: Product Selling price per unit Variable cost per unit Trunk switch $60.00 $28.00 Gas door switch $75.00 $33.00 Glove box light $40.00 $22.00 Their sales mix is reflected in the ratio 4:4:1. What is the overall Composite Unit Contribution Margin for JJ Manufacturing with their current product mix? If annual fixed costs shared by the three products are $18,840, how many units of each product are to be sold in order for JJ Manufacturing to break even? Trunk Switch? Gas Door Switch? Glove Box Light? Determine their break-even point in sales dollars. Trunk Switch? Gas Door Switch? Glove Box Light?
Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's products appears below: Selling price per unit Variable cost per unit Upholstery labor-hours per unit Required 1 Required 2 Required 3 Recliner $ 1,184 $ 800 Complete this question by entering your answers in the tabs below. Additional contribution margin per hour Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? 2. A small nearby upholstering company has offered to upholster furniture for…
Variable Cost, Fixed Cost, Contribution Margin Income Statement Chillmax Company plans to sell 3,500 pairs of casual shoes at $60 each in the coming year. Product costs include: Direct materials per pair $ 12 Direct labor per pair 4 Variable factory overhead per pair Total fixed factory overhead 30,000 Variable selling expense is a commission of $3 per pair; fixed selling and administrative expense totals $48,000. Required: 1. Calculate the total variable cost per unit. $ 2. Calculate the total fixed expense for the year. $ 3. Prepare a contribution margin income statement for Chillmax Company for the coming year. Enter all amounts as a positive number. Chillmax Company Contribution Margin Income Statement For the Coming Year Total Per Unit Sales 2$ Total variable cost Total contribution margin $ Total fixed cost Operating income
FUT manufactures two products.. Both products require manufacturing operations in two departments: Product 1 2 Profit/Unit $25 $20 Labour Hours Dept. A 6 8 Labour Hours Dept. B 12 10 For the coming production period, FUT has available 900 hours of labor that can be allocated to either of the two departments. Find the production plan and labor allocation (hours assigned in each department) that will maximize profit. (Use Excel Solver)
Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Line Item Description Iced Tea Soda Lemonade Sales price per unit $0.90 $0.60 $0.50 Variable cost per unit (0.30) (0.15) (0.10) Contribution margin per unit $0.60 $0.45 $0.40 Sensational is experiencing a bottleneck in one of its processes that affects each product as follows: Line Item Description Iced Tea Soda Lemonade Bottleneck process hours per unit 3 3 4 a. Using a theory of constraints (TOC) approach, rank the products in terms of profitability. Rank Product 1. 2. 3. b. What price for lemonade would equate its profitability (contribution margin per bottleneck hour) to that of soda? Round your answer to two decimal places.fill in the blank 1 of 1$
cakeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=D&inprogress=false Shamrock Inc. plans to sell 3,000 Irish sweaters for $200 each in the coming year. Product costs include: Direct materials per sweater $40 Direct labor per sweater 10 Variable overhead per sweater 15 Total fixed factory overhead $20,000 Variable selling expenses are $5 per sweater, and fixed selling and administrative expenses total $12,000. Required: A. Calculate the total variable cost per unit. B. Calculate the total fixed expenses for the year. C. Prepare a contribution margin income statement for Shamrock Inc. for the coming year. Shamrock Inc. Contribution Margin Income Statement For the Coming Year Previo Su
The Rosa model of Mohave Corporation is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohave’s two options follows: Rosa Umbrella Decorated Umbrella Estimated demand 11,000 units 11,000 units Estimated sales price $ 9.00 $ 20.00 Estimated manufacturing cost per unit Direct materials $ 3.50 $ 5.50 Direct labor 1.50 4.00 Variable manufacturing overhead 0.50 2.50 Fixed manufacturing overhead 2.00 2.00 Unit manufacturing cost $ 7.50 $ 14.00 Additional development cost $ 11,000 Required: 1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations. 2. Should Mohave add decorations to the Rosa umbrella? 3-a.Suppose the higher price of the decorated umbrella is expected to…
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