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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Holton Company makes three products in a single facility. Data concerning these products follow: Selling price per unit Direct materials Direct labor Variable manufacturing overhead Variable selling cost per unit Mixing minutes per unit Monthly demand in units Direct labor is a variable cost in this company. A $ 150.90 $65.60 $ 47.20 $9.00 $24.40 43.30 3,000 The mixing machines are potentially the constraint in the production facility. A total of 14,000 minutes are available per month on these machines. Required A Required B Required C Product B $76.30 $ 42.50 $13.50 $ 4.50 $ 3.30 4.00 1,000 Complete this question by entering your answers in the tabs below. C $ 170.90 $ 102.80 $ 30.80 $ 14.30 $ 8.80 4.00 2,000 Required: a. How many minutes of mixing machine time would be required to satisfy demand for all three products? b. How much of each product should be produced to maximize net operating income? c. Up to how much should the company be willing to pay for one additional hour of…
Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 34 28 Variable manufacturing overhead 21 19 Traceable fixed manufacturing overhead 29 32 Variable selling expenses 26 22 Common fixed expenses 29 24 Total cost per unit $ 179 $ 149 The company’s traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 15. Assume Cane’s customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume the company’s raw material available for production is limited to 228,000 pounds. If Cane uses its 228,000…
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Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $ 133 $ 107 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Required: 1. What is the total amount of traceable fixed manufacturing overhead for each of the two products? what is the alpha and beta
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Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $ 133 $ 107 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 2. What is the company’s total amount of common fixed expenses? 3. Assume that Cane expects to produce and sell 87,000 Alphas during the current year. One of Cane's sales representatives has found a…
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