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

See similar textbooks

Similar questions

Calculate the cost of one pound of nitrogen from a fertilizer containing 17.5% ammonium sulfate by weight and costing $8.10 per 100 lb. Express your answer in dollars per pound of nitrogen to three significant figures.
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.
Oak View Chemicals produces two main products. M-10 and M-20, and one by-product, B-60, from a single input. Chem-X. Products M-10 and M-20 can either be sold at split-off or processed further and sold. A given batch begins with 1,000 gallons of Chem-X with a cost of $90,000. Additional information regarding a batch follows. Oak View Chemicals uses the net realizable at split-off approach to allocate joint costs and treats the sales value of the by-product B-60 as other income. If processed further Product Units produced Units sales value at split off Additional Cost(per unit) Sales value(per unit) M-10 20000 $ 5.00 $ 2.00 $ 6.00 M-20 14000 $ 10.00 $ 4.00 $ 16.00 B-60 5000 $ 0.50 NA NA Required The joint cost allocated to product M-10 at Oak View…
Sanford Agricultural Chemicals (SAC) produces two main products, M-4 and M-5, and one by-product, BYP, from a single input, Gen-10. Products M-4 and M-5 can either be sold at split-off or processed further and sold. A given batch begins with 2,700 pounds of Gen-10 with a cost of $170,000. Additional information regarding a batch follows: Product M-4 M-5 BYP Units Produced 30,000 37,800 5,000 Unit Sales Value at Split-off $10.25 19.50 0.90 If Processed Additional Costs (Per Unit) $4.30 9.50 ΝΑ Further Sales Value (Per Unit) $17.50 29.50 ΝΑ Sanford Agricultural Chemicals uses the physical quantities method to allocate joint costs and the revenues from by-products are credited to joint costs. Required: Under these assumptions, the following product(s) should be processed further and then sold:
Kairos, Inc. produces three products namely, Product X, Product Y, and Product Z. The following data from 2022 are provided. Determine the product mix that would maximize the 215,000 limited machine hours available in 2023. A. X – 55,000 units; Y – 35,000 units; Z – 30,000 units B. X – 60,000 units; Y – 35,000 units; Z – 30,000 units C. X – 60,000 units; Y – 30,000 units; Z – 35,000 units D. X – 50,000 units; Y – 35,000 units; Z – 30,000 units
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…
1 a. How many pounds of raw material are needed to make one unit of each of the two products? b. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.) c. Assume that Cane’s customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the raw material available for production is limited to 160,000 pounds. How many units of each product should Cane produce to maximize its profits? d. Assume that Cane’s customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the raw material available for production is limited to 160,000 pounds. What is the total contribution margin Cane Company will earn? e. Assume that Cane’s customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the company’s raw material available for production is limited to 160,000 pounds. If Cane uses its 160,000 pounds of raw…
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.…
Rossiter Fittings produces two models of pipe fittings for underwater lines. The two models (RF-12 and RF-25) have the following characteristics, as developed by a product cost analyst RF-12 RF-25 $ 527 $367 11,997 $ 387 Selling price per unit Variable cost per unit $ 307 Expected units sold per year 3,483 The total fixed costs per year for the company are $1,118,960. Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point in units. c. The head of marketing agrees with the data provided by the cost analyst but believes that the sales of the RF-12 model will be double in units from what the cost analyst predicts. The head of marketing agrees that the total unit volume is likely to be as predicted by the cost analyst. What would be the break-even point of sales in units using the assumptions of the head of marketing?
Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500 g) Briefly explain the impact of each of the following scenarios on the contribution margin per unit and thebreak-even point:(i) Sales volume increases(ii) Total fixed cost decreases(iii) Selling price per unit increases(iv) Variable…
Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500 Required:a) Classify each cost element as either fixed, variable, or mixed
Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020. Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500 d) Assuming sales of 5,000 units, calculate Buggs-Off break-even point and margin of safety in units and sales dollars. e) Recompute the break-even point in units, assuming that variable costs increased by 20% and fixed costs are…