Product Decisions Under Bottlenecked OperationsMill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows:Type 5Type 10Type 20$43,000Revenues$49,000$56,500Variable costFixed costTotal cost$34,000$26,500$28,0008,0008,0008,000$36,000$34,500$42,000Income from operations$ 1,000$13,000$22,000+ 5,000$ 2.60Number of units+ 5,000+ 5,000Income from operations per unit$ 0.20$ 4.40Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follows:Type 5:6 hoursType 10:6 hoursType 20:12 hoursThe Marketing Department is considering a new marketing and sales campaign.Which product should be emphasized in the marketing and sales campaign in order to maximize profitability?Determining the unit contribution margin per furnace hour will assist in making your decision. Round the unit contribution margin to two decimal places.Type 5Type 20Type 10Unit contribution margin per furnace hour

Computation of unit production margin per Furnace hours: Type 5 Type 10 Type 20…

Answered: Product Decisions Under Bottlenecked…

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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Absorption and Marginal Costing The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory 0 Units produced 9,000 Units sold 7,000 Selling price per unit $ 47 Selling and administrative expenses: Variable per unit $ 4 Fixed per year $ 58,000 Manufacturing costs: Direct materials cost per unit $ 10 Direct labor cost per unit $ 6 Variable manufacturing overhead cost per unit $ 5 Fixed manufacturing overhead per year $ 90,000 Assume that direct labor is a variable cost. Required: Prepare an income statement for the year using absorption costing Prepare an income statement for the year using variable costing Reconcile the absorption costing and variable costing net operating income figures
Quantity 9,900 Revenue $ 1,615,000 Variable manufacturing cost 947,925 Variable Selling, General and Administrative cost 99,800 Contribution margin $ 567,275 Fixed manufacturing cost 237,600 Fixed Selling, General and Administrative cost 122,000 Operating profit $ 207,675 The following operating income statement shows the actual results for July: Harlow Parts Superior Plant Operating Results (For July) Quantity (units) 11,300 Revenue $ 1,748,800 Variable manufacturing cost 1,157,572 Variable Selling, General and Administrative cost 112,840 Contribution margin $ 478,388 Fixed manufacturing cost 244,080 Fixed Selling, General and Administrative cost 168,000 Operating profit $ 66,308 Variable overhead is applied on the basis of machine-hours. The standard cost sheet follows: Standard production costs Direct materials 5.00 kilo grams @ $ 6.95 $ 34.750 Direct labor 0.50 direct labor-hours @ 39.50 19.750 Variable overhead…
Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total $397,000 $212,000 $313,000 $922,000 240,000 110,000 265,000 615,000 $157,000 $102,000 $48,000 $307,000 Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Machine rent Supervision Depreciation Segment margin Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $48,000 (sales of $313,000 less total variable costs of $265,000). All variable costs are relevant. (3,000) (12,000) (47,000) (62,000) (10,500) (7,000) (3,500) (21,000) (35,000) (10,000) (25,000) (70,000) $108,500 $73,000 $(27,500) $154,000 Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. In addition, assume that dropping the parquet product line would reduce sales of the strip line by 20% and…
Assume a company has two divisions, Division D and Division E. Division D has provided the following information regarding the one product that it manufactures and sells on the outside market Selling pr por unit (on the outside market) Variable co.. per unit Fixed costs per unit (based on capacity) Capacity in units $ 60 $ 44 $8 20,000 Division E could use Division D's product as a component part in the manufacture of 4,000 units of its own newly-designed product Division E has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division D makes If the company's divisional managers are evaluated based on their division's profits and Division D is currently selling 15,000 units on the outside market. what is Division D's lowest acceptable transfer price if it were to sell 4,000 units to Division E?
Managerial Accounting: Complete the schedule of the company's total and unit costs assume the company produces and sells 90,000 units at $7.50 per unit. Prepare a contribution format income statement
Martin Incorporated provided the following information regarding its only product: Sale price per unit Direct materials used Direct labor incurred Variable manufacturing overhead Variable selling and administrative expenses Fixed manufacturing overhead Fixed selling and administrative expenses Units produced and sold Assume no beginning inventory $50.00 $16,300 $189,000 $124,000 $72,000 $65,000 $12,000 Decrease by $77,150 Increase by $82,650 Increase by $135,000 Increase by $77,150 23,000 Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 3000 units at a sale price of $45 per product assuming additional fixed manufacturing overhead costs of $5500 is incurred? (NOTE: Assume regular sales are not affected by the special order. Round any intermediary calculations to the nearest cent.)
High-Low and Cost Formula Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range): High Low 90,000 130,000 Activity (direct labor hours) Total manufacturing overhead $484,000 $628,000 The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows: Variable cost $286,000 Fixed cost 85,000 Semi-mixed cost $257,000 a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost component of the mixed cost. Isolate mixed costs: Do not use negative signs with your answers. Low High $ Total cost Less: Variable cost Fixed cost Total mixed cost $ 0 $ 0 0 0 $ 0 0 0 0 High-Low Analysis: Round variable portion per unit to two decimal places, if applicable.
P6-4A High-Low and Cost Formula Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range): Low High Activity (direct labor hours) 90,000 130,000 Total manufacturing overhead $484,000 $628,000 The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows: Variable cost $286,000 Fixed cost 85,000 Semi-mixed cost $257,000 Required a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost…
Monroe Manufacturing produces and sells a product with a price of $100/unit. The following data has been prepared for its estimated upper and lower levels of activity. Production Category Lower Limit Upper Limit Units of Production 4,000 units 6,000 units Direct Materials $60,000 $90,000 Direct Labor $80,000 $120,000 Manufacturing Overhead: Indirect materials $25,000 $37,500 Indirect labor $40,000 $50,000 Depreciation $20,000 $20,000 Selling and Admin. Expenses: Sales salaries $50,000 $65,000 Office salaries $30,000 $30,000 Advertising $45,000 $45,000 Other $15,000 $20,000 Totals $365,000 $477,500 The only variable expenses for this company are Question 15 options: indirect materials, direct materials, and direct labor. all categories of selling and administrative expenses. indirect materials, indirect labor, direct materials, and direct labor. None of these.
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Profit-Linked Productivity Measurement In 20x2, Choctaw Company implements a new process affecting labor and materials. Choctaw Company provides the following information so that total productivity can be valued: 20x1 20x2 Number of units produced 570,000 480,000 Labor hours used 190,000 240,000 Materials used (lbs.) 2,850,000 1,600,000 Unit selling price $21 $23 Wages per labor hour $12 $14 Cost per pound of material $3.80 $3.90 Required: 1. Calculate the cost of inputs in 20x2, assuming no productivity change from 20x1 to 20x2. If required, round your answers to the nearest dollar. Cost of labor $fill in the blank 1 Cost of materials fill in the blank 2 Total PQ cost $fill in the blank 3 2. How much profit change is attributable to each input's productivity change? If an item is negative, use a minus (-) sign to indicate.What is the net value of the productivity changes? If required, round your answers to the nearest dollar.$fill in the blank 7…

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