Product A requires five machine hours per unit to be produced, Product B requires only three machine hours per unit, and the company's productive capacity is limited to 240,000 machine hours. Product A sells for $16 per unit and has variable costs of $6 per unit. Product B sells for $12 per unit and has variable costs of $5 per unit. Assuming the company can sell as many units of either product as it produces, the company should: A. Produce only Product A. B. Produce only Product B. C. Produce equal amounts of A and B. D. Produce A and B in the ratio of 62.5% A to 37.5% B. E. Produce A and B in the ratio of 40% A and 60% B.

Product A requires five machine hours per unit to be produced, Product B requires only three machine hours per unit, and the company's productive capacity is limited to 240,000 machine hours. Product A sells for $16 per unit and has variable costs of $6 per unit. Product B sells for $12 per unit and has variable costs of $5 per unit. Assuming the company can sell as many units of either product as it produces, the company should: A. Produce only Product A. B. Produce only Product B. C. Produce equal amounts of A and B. D. Produce A and B in the ratio of 62.5% A to 37.5% B. E. Produce A and B in the ratio of 40% A and 60% B.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

See similar textbooks

Similar questions

Green Co. incurses cost of $15 per pound to produce Product X, which it sells for $26 per pound. The company can further process Product X to produce Product Y. Product Y would sell for $30 per pound and would require an additional cost of $10 per pound to be produced. The differential cost of producing Product Y is _____.
A Production Company can produce a product for $80 per unit. The investment per unit in equipment is $40, in labor is $25, in raw material is $10, and in fixed overhead is $5. Delta can purchase the product from Belton Industrial for $76. When Delta buys the product, they still have a $20 cost of equipment. At what demand level should Delta outsource the production of the product and buy it? Should they outsource the production at all? (Show your analysis by working out the problem.)
Bok Company has limited number of machine hours that it can use for manufacturing two products, A and B. each product has a selling price of P160 per unit but product A has 40% contribution margin and Product B has 70% contribution margin. One unit of B takes twice as many machine hours to make as a unit of A. assume either product can be sold in whatever quantity produced, which product(s) should the limited number of machine hours be used for? A. Product A B. Product B C. Both Product A and B D. Either Product A or B
Need answer the question
Need answer
ABC Company has limited number of machine hours that it can use for manufacturing two products, A and B. each product has a selling price of P160 per unit but product A has 40% contribution margin and Product B has 70% contribution margin. One unit of B takes twice as many machine hours to make as a unit of A. assume either product can be sold in whatever quantity produced, which product(s) should the limited number of machine hours be used for? Product A Product B Both Products A and B Either Product A or Product B Group of answer choices 1 2 3 4
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20.60 per pound and costs $15.40 per pound to produce. Product D would sell for $36.90 per pound and would require an additional cost of $10.10 per pound to produce. What is the differential cost of producing Product D?
Need Help
Division X makes a part with the following characteristics: Production capacity.. 25,000 units $18 Selling price to outside customers. Variable cost per unit. $11 Fixed cost, total. $100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $17 each. Suppose that Division X is operating at capacity and can sell all of its output to outside customers. If Division X sells the parts to Division Y at $17 per unit, the company as a whole will be: Select one: a. better off by $10,000 each period. b. worse off by $20,000 each period. C. worse off by $10,000 each period. d. There will be no change in the status of the company as a whole.
Yes Co. has the option to either further process product Y to produce Product Z. The selling price of product Y is $30 per unit and it costs $28 to produce each unit of product Y. Product Z would be sold for $55 and would require an additional $31 cost for production. What is the differential cost to produce product Z? a. $3 per unit b. $28 per unit c. $31 per unit d. $25 per unit
Yasmine co. Can further process process product B to produce Product C. Product B is currently selling for $30 per pound and costs $28 per pound to produce. Product C would sell for $55 per pound and require an additional cost of $31 per pound to produce. What is the differential cost of producing product C?
EBraizen, Inc. produces a product with a $30 per-unit variable cost and an $80 per-unit sales price. Fixed manufacturing overhead costs are $100,000. The firm has a one-time opportunity to sell an additional 1,000 units at $60 each that would not affect its current sales. Assuming the company has sufficient capacity to produce the additional units, how would the acceptance of the special order affect net income? Multiple Choice income would increase by $140,000. income would decrease by $30,000. income would increase by $30,000. income would increase by $40,000.