A company has a new Plant A and an old Plant B in the same metropolitan area, each with a capacity of 12 units of product per month. Fixed expense at A is ₱40,000 per month and at B is ₱20,000 per month. Variable expense per month at A is ₱1,000xN² where N = the number of units produced. At B it is ₱2,000xM² , where M = the number of units produced. At present the sales have been established at 14 units per month with each plant producing 7 units. Should the interplant load be redistributed? Why? How? Show your complete solution
A company has a new Plant A and an old Plant B in the same metropolitan area, each with a capacity of 12 units of product per month. Fixed expense at A is ₱40,000 per month and at B is ₱20,000 per month. Variable expense per month at A is ₱1,000xN² where N = the number of units produced. At B it is ₱2,000xM² , where M = the number of units produced. At present the sales have been established at 14 units per month with each plant producing 7 units. Should the interplant load be redistributed? Why? How? Show your complete solution
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A company has a new Plant A and an old Plant B in the same metropolitan area, each
with a capacity of 12 units of product per month. Fixed expense at A is ₱40,000 per
month and at B is ₱20,000 per month. Variable expense per month at A is ₱1,000xN²
where N = the number of units produced. At B it is ₱2,000xM²
, where M = the number
of units produced. At present the sales have been established at 14 units per month
with each plant producing 7 units. Should the interplant load be redistributed? Why?
How?
Show your complete solution
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