Practice problem 3. Product Mix Decision o U-Develop makes metal and wood picture frames o The metal frames take 30 minutes of machine time/unit o The wood frames take 60 minutes of machine time/unit U-Develop Frame Department Price/unit Variable costs/unit: Direct materials Direct labor Variable MOH Contribution Margin Fixed costs: Fixed MOH Selling & admin. Total fixed costs . . Reason: ▪ Metal Frames $8 8 Reason: A 4 o Strategy if machine-hours (MH) are unlimited: ▪ How many metal frames? How many wood frames? $50 20 $30 Wood Frames I o Strategy if machine-hours (MH) are limited: ▪ How many metal frames? How many wood frames? $22 24 4 $80 50 $30 $3,000 1,500 $4,500
Practice problem 3. Product Mix Decision o U-Develop makes metal and wood picture frames o The metal frames take 30 minutes of machine time/unit o The wood frames take 60 minutes of machine time/unit U-Develop Frame Department Price/unit Variable costs/unit: Direct materials Direct labor Variable MOH Contribution Margin Fixed costs: Fixed MOH Selling & admin. Total fixed costs . . Reason: ▪ Metal Frames $8 8 Reason: A 4 o Strategy if machine-hours (MH) are unlimited: ▪ How many metal frames? How many wood frames? $50 20 $30 Wood Frames I o Strategy if machine-hours (MH) are limited: ▪ How many metal frames? How many wood frames? $22 24 4 $80 50 $30 $3,000 1,500 $4,500
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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