Sports Buffs makes basketballs and footballs in a three-step process. Unfortunately, the stem insertion process has been identified as a bottleneck. Each basketball has a contribution margin of $15.00$15.00 and each football has a contribution margin of $4.00$4.00. The stem insertion equipment can make 1010 basketballs or 3030 footballs in one hour. If demand for both products is unlimited and the stem insertion machine capacity cannot be expanded, which product should be produced? If demand for each ball is limited to 30,00030,000 balls and there are 4,0004,000 hours available on the machine, how many of each product should be produced?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Sports Buffs makes basketballs and footballs in a three-step process. Unfortunately, the stem insertion process has been identified as a bottleneck. Each basketball has a contribution margin of $15.00$15.00 and each football has a contribution margin of $4.00$4.00. The stem insertion equipment can make 1010 basketballs or 3030 footballs in one hour.
- If demand for both products is unlimited and the stem insertion machine capacity cannot be expanded, which product should be produced?
- If demand for each ball is limited to 30,00030,000 balls and there are 4,0004,000 hours available on the machine, how many of each product should be produced?
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