Blossom Co. is considering the introduction of three new products. Per unit sales and cost information are as follows:ABSales$ 3.00$ 5.00$ 12.00Variable costs$ 1.20$ 3.40$6.00Fixed costs$ 0.50$ 1.00$3.50Labor hours per unit0.75 hours1.25 hours2.00 hoursMonthly demand in units700650250The company has only 1,500 direct labor hours available to commit to production of any new products.How many of each product should Blossom Co. produce and sell to maximize its profit? (Round per unit calculations to 2 decimal places,eg. 15.25 and final answers to 0 decimal places, e.g. 5,275.)AB

Calculate contribution margin per hour A B C Selling price 3.00 5.00 12.00 Variable…

Answered: Blossom Co. is considering 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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SAMMI Manufacturing has two divisions. Division A makes a part with the following characteristics: Production capacity in units 15,000 units Selling price to outside customers .. Variable cost per unit........ £25 £18 £60,000 Total fixed costs Division B, of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of £24 each. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division B continues to purchase parts from an outside supplier rather than from Division A, the company as a whole will be: a. b. C. d Better off by £15,000 each period. Worse off by £10,000 each period. Worse off by £30,000 each period. Worse off by £35,000 each period.
Lattimer Company had the following results of operations for the past year: Contribution margin income statement Sales (18,000 units) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Fixed overhead Fixed selling and administrative expenses Income Multiple Choice O $6,000 profit. Per Unit $ 12.00 $4,000 loss. 1.50 4.00 1.00 5.50 1.00 1.40 $ 3.10 A foreign company offers to buy 6,000 units at $7.50 per unit. In addition to variable costs, selling these units would add a $0.25 selling expense for export fees. Lattimer's annual production capacity is 28,000 units. If Lattimer accepts this additional business, the special order will yield a: Annual Total $ 216,000 27,000 72,000 18,000 99,000 18,000 25, 200 $ 55,800
Edge Company produces two models of its product with the same machine. The machine has a capacity of 172 hours per month. The following information is available. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit 1. Determine the contribution margin per machine hour for each model Product Cootribution Margin Standard $ 230 100 $130 Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin 1 hour 650 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin $ 260 156 $ 104 2 hours 250 units Standard Contribution margin per machine hour 2 How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total…
Algee Ltd plans to manufacture kettles and the following information is applicable: Estimated sales for the year 20.15 Estimated costs for the year 20.15 Direct material 14 000 units at R80 each R24 per unit Direct labour Factory overheads (all fixed) Selling expenses Administrative expenses (all fixed) R4 per unit R48 000 per annum 30% of sales R78 000 per annum 3.1 Calculate the break-even quantity 3.2 Calculate the break-even value using the marginal income ratio. 3.3 Calculate the selling price per unit if the profit per unit is R4. 3.4 Calculate the new break-even quantity and value if selling price is increased by 10%. 3.5 Calculate the selling price if 14 000 units provide an operating profit of RO after an additional advertising expense of R54 000
Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price $ 250 Unit variable cost 100 Total fixed costs 840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be a. increased by 800 units b. increased by 640 units c. decreased by 640 units d. increased by 400 units
Zeta Company sells a single product with a selling price of $300 per unit. Per unit variable costs are $82.00 and total fixed costs are $127,500. The number of units Zeta needs to sell to achieve its target profit of $50,000 is closest to: 610 814 a. b. C. d. 1,555 2,165
FRANCORP sells two products. Products M N Selling price per unit $80 $60 Less variable expenses per unit $46 $40 Contribution margin per unit $34 $20 Current demand per week (units) 2,100 2,400 Processing time required on machine XYZ per unit 2 min. 1 min. Machine XYZ is a constrained resource and is being used at 100% capacity. Machine XYZ has a capacity of 3,000 minutes per week. Assuming FRANCORP wants to maximize its total contribution margin, how much of each product should it produce? a. 2400 units of N and 300 units of M b. 300 units of N and 2100 units of M c. 1200 units of N and 1050 units of M d. 2400 units of N and 0 units of M
Jaybird Company operates in a highly competitive market where the market price for its product is $145 per unit. Jaybird desires a 30% profit per unit. Jaybird expects to sell 5,000 units. Additional information is as follows: Variable Costs per Unit Fixed Costs (total) Direct materials S 24 Overhead $ 45,000 Direct labor 25 General and administrative 18,000 Overhead 23 General and administrative 29 To achieve the target cost per unit, Jaybird must reduce total expenses by how much? Multiple Choice $ 62,000 $51,000 $70, 500 $67,500 $60, 500
Best Company produces three products-A, B, & C-with the following characteristics: A B Selling price per unit $30 100% $17 100% $13 100% Variable cost per unit 17 57% 8 47% 46% Contribution margin per unit $13 43% $9 53% $7 54% Machine hours per unit 3.5 3.5 1.5 The company has only 2,900 machine-hours available each month. Suppose current monthly demand for the products in question #11 is as follows: A: 400 units; B: 600 units; and C: 500 units. If Best Company wishes to maximize its contribution margin, how many of each product will it produce? 500 units of C; 400 units of A; and 214 units of B 500 units of A; 400 units of B; and 200 units of C 600 units of B; 400 units of A; and 500 units of C O 218 units of C; 350 units of B; and 300 units of A
Ramirez Corp. has two customers, C1 and C2. Ramirez Corp currently allocates indirect costs to customers at a rate of 5% of customer revenue. Data for C1 and C2 are as follows: C1 C2 Selling Price per Unit $20.00 $20.00 Units Sold 50,000 12,000 Manufacturing Cost per unit $15.00 $15.00 Number of Purchase Orders 112 27 Number of deliveries 105 68 Number of Inspection 77 50 Customer Visits 40 35 A. Using the current costing system to allocate support costs, calculate Operating Income for customers C1 and C2. Ramirez Corp.'s Management Accountant has gathered the following ABC rate information: ABC Cost Rate Number of purchase orders $40 per purchase order $85 per delivery $200 per expedited delivery Number of deliveries Number of inspections Number of customer visits $400 per customer visit b. Calculate the total support cost allocated to C1 & C2 using the Activity Based Costing (ABC) system. c. Comparing the indirect cost allocated in part a. to the indirect cost allocated in part b.…
Swisher, Incorporated reports the following annual cost data for its single product: Normal production level 30,000 units Direct materials $6.40 per unit Direct labor $3.93 per unit Variable overhead $5.80 per unit Fixed overhead $150,000 in total This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's income increase or decrease under variable costing? $60,000 decrease. b. $90,000 decrease. c.There is no change in gross margin. d. $90,000 increase. e. $60,000 increase.
Sunland Co. is considering the introduction of three new products. Per unit sales and cost information are as follows: Sales Variable costs Fixed costs Labor hours per unit Monthly demand in units A $ 3.00 $ 1.20 $ 0.50 0.75 hours 700 B $ 5.00 $ 3.40 $ 1.00 1.25 hours 650 C $ 13.00 $ 7.00 $ 3.50 2.00 hour 250 The company has only 1,600 direct labor hours available to commit to production of any new products. How many of each product should Sunland Co. produce and sell to maximize its profit? (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.)

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