Jov Co sells three products: A, B and C. It can either make the products itself or purchase them from a subcontractor.The following information is available:Machine hours to manufactureProductABCO 0O 2,500532O 4,500Variable cost($)302015For the coming period, Jov Co has received orders from its customers for 5,000 units of each product but it only has 20,000 machine hours available.What is the optimum number of units of product B which Jov Co should purchase from the subcontractor?O 5,000Purchase cost from subcontractor($)403520

Using Excel's Solver, we can determine the optimum number of units that should be bought from the…

Answered: What is the optimum number of units of…

What is the optimum number of units of product B which Jov Co should purchase from the subcontractor? 5,000 D0 2,500 4,500

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter11: Linear Optimization Models

Section: Chapter Questions

Problem 7P: Vollmer Manufacturing makes three components for sale to refrigeration companies. The components are...

See similar textbooks

Related questions

Q: Chapter 6 Uniform Selres Analysis4 Acertain industrial firm desires an economic analysis to…

A: Equivalent uniform annual cost for given required rate is calculated and the equivalent annual cost…

Q: Dhofar Company has the following information: Total Fixed cost OMR 20000 Selling price per unit…

A: Margin of Safety (OMR) Profit / PV ratio PV ratio Selling price - variable cost / selling price *100…

Q: You want to subtract your cost of 250 in cell E6, from your selling price of 400 in cell E5, and…

A: Calculating the result: The difference between the selling price and cost is generally profit. This…

Q: A firm produces according to the following production function: F(L,K)=L0.7K0.3. The price of…

Q: Machine A has fixed costs of P500,000 and a variable cost of P20. Machine B has fixed costs of…

A: Solution: Indifference point in units = Difference in fixed costs / Difference in variable cost per…

Q: 3. In your new position, the area leader asked you how much the company should order to minimize the…

A: Lets understand the basics. Economic order quantity is a quantity at which entity can meet its…

Q: Use the attached information to calculate the following The selling price per unit that will…

A: Sales volume required to earn a desired operating profit = ( Fixed cost + Desired profit) /…

Q: The figure below shows graphs of the fixed cost function, total cost function and the total revenue…

A: An financial tool called a break-even analysis is used to figure out a company's expense structure…

Q: Suppose that a manufacturer can produce a part for $9.00 with a fixed cost of $5,000. Alternately,…

A: CVP analysis is considered a decision-making tool that helps management to make strategies and take…

Q: Company D is planning to perform an ABC analysis for its products. An information table is given…

A: ABC analysis is an inventory control method which include categorizing of items used in production…

Q: Q. 8 Which following costs need to be considered for both make or buy options? O. Fixed overhead…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Assume the following information: Volume Total Cost 100 units $1,300 90 units 1,500 106 units 1,750…

A: Mixed cost problems are solved using the High -Low-cost method. High-low method: Variable cost per…

Q: The figure below shows graphs of the fixed cost function, total cost function and the total revenue…

A: The total revenue, total cost and the fixed cost functions have been plotted on a graph. The…

Question

Jov Co sells three products: A, B and C. It can either make the products itself or purchase them from a subcontractor.
The following information is available:
Machine hours to manufacture
Product
A
B
C
O 0
O 2,500
5
3
2
O 4,500
Variable cost
($)
30
20
15
For the coming period, Jov Co has received orders from its customers for 5,000 units of each product but it only has 20,000 machine hours available.
What is the optimum number of units of product B which Jov Co should purchase from the subcontractor?
O 5,000
Purchase cost from subcontractor
($)
40
35
20

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Formula

VIEW

Step 2: Computation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Crane Company uses 9000 units of Part A in producing its products. A supplier offers to make Part A for $5. CraneCompany has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the relevant cost of buying Part A from the supplier is $72000. $45000. $27000. $0.
Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: Zena Technology cost data Costs Direct materials Direct labor Manufacturing overhead Amounts $14 20 3 A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price per unit that Zena should accept for this special order?
Gadubhai
Zena Technology sells arc computer printers for $60 per unit. Unit product costs are: Zena Technology cost data Costs Direct materials Direct labor Manufacturing overhead Amounts $12 22 4 A special order to purchase 14,519 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $4 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price per unit that Zena should accept for this special order? Round to the nearest penny, two decimal places.
Rain Incorporated currently manufactures part QX100, which is used in several products produced by the company. Monthly production costs for 10,000 units of QX100 are as follow
please step by step solution.
Steve company produces 30000 units of parts each year for use on its production line. The cost per units of the part S6: Direct material $3.60 Direct labor $10.00 Variable manufacturing overhead $2.40 Fixed manufacturing overhead $9.00 Total cost per part$25.00 An outside supplier has offered to sell 30000 units of the part each year at a product company at $21.00 per part. If the products company accepts this offer, the facilities now being used to manufacturer the parts could be rented by another company at the annual rent of $80,000.00. However, the products have determined that two-thirds of the fixed manufacturing overhead being applied to the part would continue even if the part S6 was purchased by an outside supplier. What is the advantage or disadvantage of accepting the outside supplier's offer? and how much ?
2Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: Direct materials $14, Direct labor $20, Manufacturing overhead $3 equals Total $37. A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?
Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: Direct material:14 Direct labor:20 Manufacturing overhead:3 Total:37 A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $3 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?
Lens Care Inc. (LCI) manufactures specialized equipment for polishing optical lenses. There are two models - one mainly used for fine eyewear (F-32) and another for lenses used in binoculars, cameras, and similar equipment (B-13). The manufacturing cost of each unit is calculated using activity-based costing, using the following manufacturing cost pools: Cost Pools Materials handling Manufacturing supervision Assembly Machine setup Inspection and testing Allocation Base Number of parts Hours of machine time Number of parts Each setup Logged hours Costing Rate $2.40 Per part $ $ 14.8per $ 3.30 Per part $ Ohour 56.5 Per setu 0 45.5per Ohour 19.5per Packaging Logged hours $ Ohour LCI currently sells the B-13 model for $1,775 and the F-32 model for $1,220. Manufacturing costs and activity usage for the two products are as follows:
Beta makes a component used in its engine. Monthly production costs for 1,000 component units are as follows: Direct materials $46,000 Direct labor 11,500 Variable overhead costs 34,500 Fixed overhead costs 23,000 Total costs $115,000 It is estimated that 8% of the fixed overhead costs will no longer be incurred if the company purchases the component from an outside supplier. Beta has the option of purchasing the component from an outside supplier at $97.75 per unit. 22) If Beta accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total 23) If Beta purchases 1,000 units from the outside supplier per month, then what would be the change in operating income?
Beat Company manufactures 8,000 units of a certain component per year. This component is used in the production of the main product. The following are the costs to make the component per unit: Direct materials $4 Direct labor $4 Variable overhead $3 Fixed overhead $5 If Beat Company buys the component from an outside supplier, the company can rent out the released facilities for P12,360 a year. The cost of the component per unit as quoted by the supplier is P15. 25% of fixed overhead applied in the manufacture of the component will continue regardless of what decision is made. For all purchase made by the company, freight and handling costs are applied at 2% of the purchase price. The direct materials cost presented above is exclusive of such freight and handling cost. What is the advantage or disadvantage of buying the component?A. P12,240 advantage B. 24,600 advantage C. 5,400 disadvantage D. 8,600 advantage