E7-15 (Algo) Making Decisions Involving Constrained Resource [LO 7-2, 7-7] Cordova manufactures three types of stained glass windows, cleverly named Products A, B, and C. Information about these products follows: Sales price Variable costs per unit Product A $ 45.00 21.30 Product B $ 55.00 Product C $ 95.00 23.00 37.30 Fixed costs per unit 7.00 Required number of labor hours 1.50 7.00 2.50 7.00 3.00 Cordova currently is limited to 60,000 labor hours per month. Required: 1-a. Assuming an infinite demand for each of Cordova's products, determine contribution margin per direct labor hour for each product. 1-b. Which product would be Cordova's first choice to produce? Complete this question by entering your answers in the tabs below. Required 1A Required 1B Assuming an infinite demand for each of Cordova's products, determine contribution margin per direct labor hour for each product. Note: Round your answers to 2 decimal places. Product A Product B Product C Contribution Margin CM per labor hour CM per labor hour CM per labor hour

E7-15 (Algo) Making Decisions Involving Constrained Resource [LO 7-2, 7-7] Cordova manufactures three types of stained glass windows, cleverly named Products A, B, and C. Information about these products follows: Sales price Variable costs per unit Product A $ 45.00 21.30 Product B $ 55.00 Product C $ 95.00 23.00 37.30 Fixed costs per unit 7.00 Required number of labor hours 1.50 7.00 2.50 7.00 3.00 Cordova currently is limited to 60,000 labor hours per month. Required: 1-a. Assuming an infinite demand for each of Cordova's products, determine contribution margin per direct labor hour for each product. 1-b. Which product would be Cordova's first choice to produce? Complete this question by entering your answers in the tabs below. Required 1A Required 1B Assuming an infinite demand for each of Cordova's products, determine contribution margin per direct labor hour for each product. Note: Round your answers to 2 decimal places. Product A Product B Product C Contribution Margin CM per labor hour CM per labor hour CM per labor hour

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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! Required information Self-Study Problem 11-2 (Algo) The Make-vs.-Buy Decision [The following information applies to the questions displayed below.] Highvalu Incorporated manufactures a moderately priced set of lawn furniture (a table and four chairs) that it sells for $320. The company currently manufactures and sells 7,900 sets per year. The manufacturing costs include $104 for direct materials and $64 for direct labor per set. The overhead charge per set is $54, which consists entirely of fixed costs. Assume that Highvalu currently purchases the chair cushions for its lawn set from an outside vendor for $21 per set. HighValu's chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the company money. Additional information shows that if HighValu were to manufacture the cushions, the direct materials cost would be $8 and the direct labor cost would be $6 per set. In…
Variable costs: Direct materials $0.15 Direct labor 0.06 Variable overhead 0.11 Fixed overhead 0.30 Total cost $0.62
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Outsourcing (Make-or-Buy) Decision Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. Direct materials $9.00 Direct labor 1.40 Factory overhead 10.00 Total $ 20.40 These cost predictions include $80,000 in fixed factory overhead averaged over 10,000 units. The completed air purifier units include a battery-operated electric motor, which Mountain Air assembles with parts purchased from an outside vendar for $2.00 per motor. Mini Motor Company has offered to supply an assembled battery operated motor at a cost of $5.50 per unit, with a minimum annual order of 5,000 units. If Mountain Air accepts this offer, it will be able to reduce the variable labor and variable overhead casts of the auto air purifier by 50 percent. (a) Determine whether Mountain Air should continue to make the…
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Outsourcing (Make-or-Buy) Decision Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. Direct materials $8.00 Direct labor 1.50 Factory overhead 7.00 Total $16.50 These cost predictions include $40,000 in facility-level fixed factory overhead averaged over 10,000 units. One of the component parts of the auto air purifier is a battery-operated electric motor. Although the company does not currently manufacture these motors, the preceding cost predictions are based on the assumption that it will assemble such a motor. Mini Motor Company has offered to supply an assembled battery-operated motor at a cost of $4.50 per unit, with a minimum annual order of 5,000 units. If Mountain Air accepts this offer, it will be able to reduce the variable labor and variable overhead costs of…