2. Greenspan Industries produces three types of industrial fertilizer (Alpha05, Beta10, andGamma15) in 500 pound batches. Each type uses a certain amount of a standard mix ofmaterials (at a cost of $3/pound) and a certain amount of nitrogen pellets (at a cost of$5/pound). Data (per batch) for the three types are as follows:Alpha05Beta 10$8,000$ 5,500475 pounds25 pounds$400450 pounds50 pounds$500Selling PriceQuantity of Standard MixQuantity of Nitrogen PelletsVariable Conversion CostsGamma15$ 12,000425 pounds75 pounds$600The demand for all three types of fertilizer is unlimited. The supply of the standard mix ofchemicals is unlimited. The supply of nitrogen pellets is limited to 18,000 pounds. We mustproduce at least 100 batches of each type of fertilizer. Showing your work in an organizedmanner, how many batches of each type of fertilizer should we produce assuming we want touse up the entire supply of nitrogen pellets and maximize operating income? (Hint: consider$CM per unit of the constraint.)

Contribution margin = Sales value - variable cost

Greenspan Industries produces three types of industrial fertilizer (Alpha05, Beta10, and Gamma15) in 500 pound batches. Each type uses a certain amount of a standard mix of materials (at a cost of $3/pound) and a certain amount of nitrogen pellets (at a cost of $5/pound). Data (per batch) for the three types are as follows: Beta 10 $8,000 450 pounds 50 pounds $500 Selling Price Quantity of Standard Mix Quantity of Nitrogen Pellets Variable Conversion Costs Alpha05 $ 5,500 475 pounds 25 pounds $400 Gamma15 $ 12,000 425 pounds 75 pounds $600 The demand for all three types of fertilizer is unlimited. The supply of the standard mix of chemicals is unlimited. The supply of nitrogen pellets is limited to 18,000 pounds. We must produce at least 100 batches of each type of fertilizer. Showing your work in an organized manner, how many batches of each type of fertilizer should we produce assuming we want to use up the entire supply of nitrogen pellets and maximize operating income? (Hint: consider

Greenspan Industries produces three types of industrial fertilizer (Alpha05, Beta10, and Gamma15) in 500 pound batches. Each type uses a certain amount of a standard mix of materials (at a cost of $3/pound) and a certain amount of nitrogen pellets (at a cost of $5/pound). Data (per batch) for the three types are as follows: Beta 10 $8,000 450 pounds 50 pounds $500 Selling Price Quantity of Standard Mix Quantity of Nitrogen Pellets Variable Conversion Costs Alpha05 $ 5,500 475 pounds 25 pounds $400 Gamma15 $ 12,000 425 pounds 75 pounds $600 The demand for all three types of fertilizer is unlimited. The supply of the standard mix of chemicals is unlimited. The supply of nitrogen pellets is limited to 18,000 pounds. We must produce at least 100 batches of each type of fertilizer. Showing your work in an organized manner, how many batches of each type of fertilizer should we produce assuming we want to use up the entire supply of nitrogen pellets and maximize operating income? (Hint: consider

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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Your Company manufactures and sells three products that all use a liquid compound as an ingredient. The high demand for all three of these products exceeds the supply of liquid compound that is available from suppliers and only 6,025 ounces are available. Information related to the three products is below: Products A B Demand in units 1,500 1,000 425 Selling price per unit Variable costs per unit $120 $100 $200 $84 $70 $130 Ounces per unit 3 2 5 What is the maximum annual net operating income that Your Company can make each year from these three products? Do not use $ in your answer.
1
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6. Cartman makes Supersized Cheezy-Poofs. Cartman determined the standards for each unit (bag) of Cheezy-Poof produced requires 1.5 gallons of ingredients (direct materials) and 0.75 direct labor hours. Cartman expects to pay $2 per gallon of ingredients and his employees a rate of S10 per hour. Based on the company's forecasts, Cartman is expecting to sell 15,000 units (bags) during the year. At the end of year, Cartman actually sold 16,000 units (bags), used 25,000 gallons of ingredients, and paid $1.9 per gallon. Further, Human resources informed Cartman that he incurred $144,000 in direct labor costs from 10,000 direct labor hours (assume no overtime is used). a. What is the material price variance? Indicate favorable / unfavorable variances for full credit b. What is the material quantity variance? Indicate favorable / unfavorable variances for full credit d. What is the labor rate variance? Indicate favorable / unfavorable variances for full credit d. What is the labor usage…
Glassworks makes products for the sandblasting industry. One of the products they make is bags of high-grade sandblasting media that is made from a combination of quartz-sand and recycled ground-glass (cullet). Standard costs and quantities to produce one bag of sandblasting media are as follows: Quantity Cost Quartz-sand 20 kg $4.00 Cullet 5 kg $3.00 80,000 bags of sandblasting media were produced. Actual purchases and inventories were: Beginning Ending Purchases Purchases Inventory Inventory (in kg) ( in $) Quartz-sand 0 kg 0 kg 1,610,000 kg $322,161 Cullet 0 kg 120,000 kg 550,000 kg $286,000 Required: Calculate the following variances: a)Total direct material efficiency variance. b)Total direct material mix variance.…
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Answer questions 9 and 10
Benoit Company produces three productsA, B, and C. Data concerning the three products follow (per unit): ProductABCSelling price$ 80$ 56$ 70Variable expenses: Direct materials24159Other variable expenses242740Total variable expenses484249 Contribution margin$ 32$ 14$ 21 Contribution margin ratio40 % 25% 30% The company estimates that it can sell 800 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 5,000 pounds available each month. Required:1. Calculate the contribution margin per pound of the constraining resource for each product.2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third?3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of materials?