The Morton Company produces and sells twoproducts: A and B. Financial data related to producing these two products are summarized as in the tablebelow.(a) If these products are sold in the ratio of four A’sfor every three B’s, what is the break-even point?(b) If the product mix has changed to five A’s to fiveB’s, what would happen to the break-even point?(c) In order to maximize the profit, which productmix should be pushed?(d) If both products must go through the same manufacturing machine and there are only 30,000machine hours available per period, whichproduct should be pushed? Assume that product A requires 0.5 hour per unit and B requires0.25 hour per unit.Product A Product BSelling price $10.00 $12.00Variable costs $5.00 $10.00Fixed costs $2,000 $60
The Morton Company produces and sells two
products: A and B. Financial data related to producing these two products are summarized as in the table
below.
(a) If these products are sold in the ratio of four A’s
for every three B’s, what is the break-even point?
(b) If the product mix has changed to five A’s to five
B’s, what would happen to the break-even point?
(c) In order to maximize the profit, which product
mix should be pushed?
(d) If both products must go through the same manufacturing machine and there are only 30,000
machine hours available per period, which
product should be pushed? Assume that product A requires 0.5 hour per unit and B requires
0.25 hour per unit.
Product A Product B
Selling price $10.00 $12.00
Variable costs $5.00 $10.00
Fixed costs $2,000 $60
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
