1.
Calculate the gross profit for each product in total and per square yard.
1.

Explanation of Solution
Calculate the gross profit for each product in total and per square yard:
Product | ||
Particulars | Commercial | Residential |
Sales: | ||
$448,000 | ||
$150,000 | ||
Less: Cost of goods sold | ||
Variable cost: | ||
$280,000 | ||
$90,000 | ||
Fixed costs: | ||
$130,676 | ||
$9,000 | ||
Gross profit | $37,324 | $51,000 |
Gross profit per square yard: | ||
$1.33 | ||
$8.50 |
Table (1)
2.
Calculate the contribution margin for each product in total and per square yard.
2.

Explanation of Solution
Calculate the contribution margin for each product in total and per square yard:
Product | ||
Particulars | Commercial | Residential |
Sales: | ||
$448,000 | ||
$150,000 | ||
Less: Variable cost: | ||
$280,000 | ||
$90,000 | ||
Gross profit | $168,000 | $60,000 |
Contribution margin per square yard: | ||
$6.00 | ||
$10.00 |
Table (2)
3 a.
Calculate the following:
- a. Compute the contribution margin per labor hour for each product.
- b. Compute the optimum product mix, on a weekly basis and state the number of square yards of each product that should be produced each week.
- c. Draw a graph for this problem, similar to the solution presented in Exhibit.
3 a.

Explanation of Solution
- a. Compute the contribution margin per labor hour for each product:
Product | ||
Particulars | Commercial | Residential |
Contribution margin per square yard (A) | $6 | $10 |
Labor hours per square yard (B) | 0.12 | 0.18 |
Contribution margin per labor hour | $50 | $55.56 |
Table (3)
- b. Compute the optimum product mix, on a weekly basis and state the number of square yards of each product that should be produced each week.
Product | Hours (a) | Square yards |
Residential: | ||
1,440 | 8,000 | |
Commercial: at 0.12 hour per square yard | ||
$3,160 | $26,333 |
Table (4)
- c. Draw a graph for this problem, similar to the solution presented in Exhibit.
Figure (1)
4.
State the conceptual lesson that is associated with requirements 1 to 3.
4.

Explanation of Solution
- The major conceptual lesson is that neither of the profit measures described in requirement 1 or 2 is useful for ascertaining the short-term optimum product mix in the presence of resource constraints.
- Thus, for this purpose, it is essential to distribute available labor hours on the basis of the contribution margins expressed on a per-labor-hour basis.
5.
Indicate the primary role of the
5.

Explanation of Solution
The following are the major role of the management accountant in the given context:
- To work with engineers for calculating the labor-hour consumption of each product, and
- To develop accurate estimates of the contribution margins for each product and.
Together, these inputs permits to provide an optimum short-term product mix.
Want to see more full solutions like this?
Chapter 11 Solutions
COST MANAGMENT WITH CONNECT ACCESS
- @ Accountarrow_forwardIn a fully integrated standard costing system standards costs eventually flow into the: a. cost of goods sold account b. standard cost account c. selling and administrative expenses account d. sales accountarrow_forwardNet sales total $438,000. Beginning and ending accounts receivable are $35,000 and $37,000, respectively. Calculate days' sales in receivables. A.27 days B.30 days C.36 days D.31 daysarrow_forward
- Provide correct answerarrow_forwardFor the system shown in figure below, the per unit values of different quantities are E-1.2, V 1, X X2-0.4. Xa-0.2 Determine whether the system is stable for a sustained fault. The fault is cleared at 8-60°. Is the system stable? If so find the maximum rotor swing. Find the critical clearing angle. E25 G X'd 08 CB X2 F CB V28 Infinite busarrow_forwardGeisner Inc. has total assets of $1,000,000 and total liabilities of $600,000. The industry average debt-to-equity ratio is 1.20. Calculate Geisner's debt-to-equity ratio and indicate whether the company's default risk is higher or lower than the average of other companies in the industry.arrow_forward
- Hy expert give me solution this questionarrow_forwardBaker's Market began the current month with inventory costing $35,250, then purchased additional inventory at a cost of $78,400. The perpetual inventory system indicates that inventory costing $82,500 was sold during the month for $88,250. An inventory count at month-end shows that inventory costing $29,000 is actually on hand. What amount of shrinkage occurred during the month? a) $350 b) $1,150 c) $1,750 d) $2,150arrow_forwardA pet store sells a pet waste disposal system for $60 each. The cost per unit, including the system and enzyme digester, is $42.50. What is the contribution margin per unit? A. $15.00 B. $17.50 C. $12.25 D. $19.00arrow_forward
- Narchie sells a single product for $40. Variable costs are 80% of the selling price, and the company has fixed costs that amount to $152,000. Current sales total 16,000 units. What is the break-even point in units?arrow_forwardA company sells 32,000 units at $25 per unit. The variable cost per unit is $20.50, and fixed costs are $52,000. (a) Determine the contribution margin ratio. (b) Determine the unit contribution margin. (c) Determine the income from operations.arrow_forwardhello tutor provide solutionarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





