Kitchen Magician, Ic., has assembled the following data pertaining to its two most popular products. Blender Mixer Direct material $ 20 $ 28 Direct labor 13 41 Manufacturing overhead @ $50 per machine hour 50 100 Cost if purchased from an outside supplier Annual demand (units) 70 136 36,000 44,000 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $25. Kitchen Magician's management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 76,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? 2. With all other things constant, if management is able to reduce the direct material for a mixer to $20 per unit, how many units of each product should be manufactured? Purchased?

Kitchen Magician, Ic., has assembled the following data pertaining to its two most popular products. Blender Mixer Direct material $ 20 $ 28 Direct labor 13 41 Manufacturing overhead @ $50 per machine hour 50 100 Cost if purchased from an outside supplier Annual demand (units) 70 136 36,000 44,000 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $25. Kitchen Magician's management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 76,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? 2. With all other things constant, if management is able to reduce the direct material for a mixer to $20 per unit, how many units of each product should be manufactured? Purchased?

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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