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.
Chovanec Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 170 100% Variable expenses 68 40% Contribution margin $ 102 60% Fixed expenses are $521,000 per month. The company is currently selling 7,000 units per month. Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change? Multiple Choice increase of $6,000 decrease of $6,000 decrease of $48,000 increase of $48,000
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
Explorer Company has an annual plant capacity of 3,000 units. Data concerning this product are given below: Direct Materials cost per unit $ 20.00 Direct Labor cost per unit $ 8.00 Variable manufacturing overhead cost per unit $ 5.00 Variable sales commissions per unit $ 6.00 Fixed selling and administration expenses per unit $ 9.00 $ 48.00 Currently, the sales volume at the regular selling price of $75 is 2,500 units per year. The company has received a special order for 500 units at a selling price of $45 each. Regular sales would not be affected, and sales commissions on the 500 units would only be 2/3 of the regular sales commission per unit for this special order. This special order would have no impact on total fixed costs. Required: a. Determine whether the company should accept the special order. Explain in your own words your decision and show all computations.
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
Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price $216 Unit variable cost $111 Total fixed costs $785,000 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 1,462 units b.increased by 1,218 units c.decreased by 1,218 units d.increased by 975 units
The machining division of Cullumber International has a capacity of 2,000 units. Its sales and cost data are: Selling price per unit $80 Variable manufacturing costs per unit 25 Variable selling costs per unit 3 Total fixed manufacturing overhead 183,200 The machining division is currently selling 1,800 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $3/unit. If Cullumber's assembly division is currently buying from an outside supplier at $75 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price? The company profits would by $
Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product G Product B Selling price per unit $ 200 $ 230 Variable costs per unit 85 138 Contribution margin per unit $ 115 $ 92 Machine hours to produce 1 unit 0.4 hours 1.0 hours Maximum unit sales per month 650 units 250 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $11,500 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)
The following information is available for Division X of Meisels, Inc.: Fixed cost per unit (based on capacity) Variable cost per unit Capacity in units Selling price to outside customers $5.25 $32 24,000 $41 Division Y would like to purchase 6,000 units each year from Division X. Division X has enough excess capacity to handle all of Division Y's needs. Division Y now purchases from an outside supplier at a price of $39 and insists that it should be charged that same price by Division X. If Division X refuses to accept the $39 price for transfers to Division Y, what effect would this have on the total annual profit of Meisels, Inc.?
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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