Talbot Industries manufactures two models of wireless headset: TI-12 and TI-28. Each product requires time on a single machine. The machine has a monthly capacity of 684 hours. Total market demand for the two products is limited to 2,360 units of TI-12 and 1,180 units of TI-28 monthly. Talbot is currently producing and selling 1,680 TI-12 models and 816 TI-28 models each month. Cost and machine-usage data for the two products are shown in the following spreadsheet, which analysts at Talbot use for production planning purposes: Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit TI-12 $ 116 TI-28 $ 398 Total 41 108 47 82 8 74 $ 20 $ 134 $ 35,800 $ 32,800 $ 68,600 0.1 0.5 576 684 1,680 2,360 816 1,180 $ 74,344 Required: a. What is the optimal production schedule for Talbot Industries? In other words, how many TI-12s and TI-28s should the company produce each month to maximize monthly profit? b. If Talbot Industries produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?

Talbot Industries manufactures two models of wireless headset: TI-12 and TI-28. Each product requires time on a single machine. The machine has a monthly capacity of 684 hours. Total market demand for the two products is limited to 2,360 units of TI-12 and 1,180 units of TI-28 monthly. Talbot is currently producing and selling 1,680 TI-12 models and 816 TI-28 models each month. Cost and machine-usage data for the two products are shown in the following spreadsheet, which analysts at Talbot use for production planning purposes: Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit TI-12 $ 116 TI-28 $ 398 Total 41 108 47 82 8 74 $ 20 $ 134 $ 35,800 $ 32,800 $ 68,600 0.1 0.5 576 684 1,680 2,360 816 1,180 $ 74,344 Required: a. What is the optimal production schedule for Talbot Industries? In other words, how many TI-12s and TI-28s should the company produce each month to maximize monthly profit? b. If Talbot Industries produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12EB: Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes...

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Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how many of each product should be made?
Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
Talbot Industries manufactures two models of wireless headset: TI-12 and TI-28. Each product requires time on a single machine. The machine has a monthly capacity of 540 hours. Total market demand for the two products is limited to 2,000 units of TI-12 and 1,000 units of TI-28 monthly. Talbot is currently producing and selling 1,500 TI-12 models and 780 TI-28 models each month. Cost and machine-usage data for the two products are shown in the following spreadsheet, which analysts at Talbot use for production planning purposes: Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit Required A Required B TI-12 Model TI-28 Model TI-12 $ 80 23 29 8 $ 20 units units 0.1
Talbot Industries manufactures two models of wireless headset: TI-12 and TI-28. Each product requires time on a single machine. The machine has a monthly capacity of 540 hours. Total market demand for the two products is limited to 2,000 units of TI-12 and 1,000 units of TI-28 monthly. Talbot is currently producing and selling 1,500 TI-12 models and 780 TI-28 models each month. Cost and machine-usage data for the two products are shown in the following spreadsheet, which analysts at Talbot use for production planning purposes: Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit TI-12 $ 80 Required A Required B 23 29 8 $ 20 0.1
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 170 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes. Alpha Delta Total Price $ 125 $ 155 Less variable costs per unit Material 17 32 Labor 23 35 Overhead 14 14 Contribution margin per unit $ 71 $ 74 Fixed costs Manufacturing $ 7,400 Marketing and administrative $ 4,400 $ 11,800 Machine hours per unit 2.0 2.5 Machine hours used 495 Machine hours available 500 Quantity produced 110…
Santora Company manufactures two products—toaster ovens and bread machines. The following data are available: Toaster Ovens Bread Machines Sales price $70 $170 Variable costs $50 $70 Santora can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Santora's production capacity is 1600 machine hours per month, and it can sell as many units of either type as it can produce. Which product and how many units should the company produce in a month to maximize profits? (Round machine hour per unit to two decimal places and your final answer to the nearest whole dollar.)
Rachmin Inc. manufactures several models of computer monitors. The basic model sells for $330 and has variable costs of $285 per unit. The deluxe model sells for $510 and has variable costs of $375 per unit. The professional model sells for $1,800 and has variable costs of $1,200 per unit. Total fixed expense is $433,500 per year. In general, the company sells six basic models and three deluxe models for every professional model sold. Required (A) Compute the number of basic models, deluxe models, and professional models that are sold at the breakeven point. (B) Check you answer to (A) by preparing a contribution margin income statement for Rachmin Inc. for the year. (C) According to the authors of the textbook, how do risk and uncertainty relate to Cost-Volume Profit (CVP) analysis?
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Muscat Inc. has been manufacturing its own Camera for its Mobile Phone. The company is currently operating at 100% of capacity. Variable manufacturing overhead cost is OMR 3 per unit. The direct materials and direct labor cost per unit to make the camera are OMR 4 and OMR 6, respectively, fixed cost is OMR 50,000. Normal production is 50,000 Mobile Phone per year. A supplier offers to make the Cameras at a price of OMR 13.50 per unit. If Muscat accepts the supplier's offer; all variable manufacturing costs will be eliminated, but the OMR 50,000 of fixed manufacturing overhead currently being charged to the Cameras will have to be absorbed by other products. what will be the effect on net income? if the productive capacity released by not making the Cameras could be used to produce income of R.O. 40,000 Select one: a. OMR 15,000 decrease Ob. OMR 25,000 decrease O c. OMR 725,000 increase O d. None of the answers are correct O e. OMR 15,000 increase
Ellix Company manufactures two models of ultra-high fidelity speakers—the X200 model and the X99 model. Data regarding the two products follow: Product Direct Labor-Hours Annual Production Total Direct Labor-Hours X200 0.4 DLHs per unit 17,000 units 6,800 DLHs X99 0.6 DLH per unit 40,000 units 24,000 DLHs 30,800 DLHs Additional information about the company follows: Model X200 requires $35 in direct materials per unit, and model X99 requires $24. The direct labor workers are paid $20 per hour. The company has always used direct labor-hours as the allocation base for applying manufacturing overhead cost to products. Model X200 is more complex to manufacture than model X99 and requires special equipment. Because of the special work required in (d) above, the company is considering an activity-based absorption costing that applies manufacturing overhead cost to products using three activity cost pools: Activity Cost Pool Activity Measure Estimated Total Cost…
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Finn Flying Company produces and sells kites for $51. The company has the capacity to produce 10,600 kites each period. At capacity, the costs assigned to each unit are as follows: Unit-level costs $31 Product-level costs $16 Facility-level costs $11 The company has received a special order for 230 kites. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order? $70 $60 $31 $65