Question

6 .Isle company produces two products. Information on the 2 products is as follows – A...

6 .Isle company produces two products. Information on the 2 products is as follows –
A B
Selling price per unit $10 $4
Variable cost per unit $7 $2
Labour hours per unit 1 hr. 2 hrs.
Market limitation 50,000 units 20,000 units
Total labour hours available 75,000 hrs
Total fixed cost $100,000

7. Using the information from question 6, assume there was no market limitation. What
would be the best decision?


a. Produce 50,000 units of A and 12,500 units of B
b. Produce 37,500 units of B only
c. Produce 20,000 units of B
d. Product 75,000 units of product A only

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The contribution (ie. Selling price - Variable cost) per unit of product A is $10 - $7 = $3

The contribution (ie. Selling price - Variable cost) per unit of product B is $4 - $2 = $2

Since the contribution of product A is greater than product B, more number of product A should be produced.

Total labour hours available is 75,000 and product A requires 1 labour hour for each unit of product A.

Since there is no market limitation, all 75,000 labour hours should be used for 75,000 units of product A.

OPTION D

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Dunhill Company produces 4 products. Information on these four products are as follows                Selling Price    ...
Dunhill Company produces 4 products. Information on these four products are as follows                Selling Price     Variable Cost     Labour hours    Machine hours Product A    $30.00           $25.00                5                   5 Product B   $25.00            $19.00               6                    3 Product C   $20.00            $10.00              5                     2 Product D   $15.00 $3.00              6                      3 Dunhill company has limited machine hours. The four products should be produced in the following order – a. C,D,B,A b. D,C,B,A c. A,B,C,D d. C,B,D,A
THE Company manufactures two products. Information about these two products for the most recent year is...
THE Company manufactures two products. Information about these two products for the most recent year is given below: Product A Product B selling price per unit $18 $16 variable costs per unit $ 6 $ 5 THE's total expected fixed costs for the coming year amount to $60,000. It takes 5 machine hours and 3 direct labor hours to produce one unit of Product A and it takes 4 machine hours and 8 direct labor hours to produce one unit...
Jonah Hill Company manufactures two products. Information about the two products is as follows:                 Product...
Jonah Hill Company manufactures two products. Information about the two products is as follows:                 Product X Product Y Selling price per unit $80 $30 Variable costs per unit 40 20 Contribution margin per unit $40 $10 The company expects fixed costs to be $185,000. The firm expects 40% of its sales (in units) to be Product X and 60% to be Product Y (a sales mix of 4:6). Calculate the weighted average contribution margin or contribution margin by package...
ABC Company produces three products: A, B, and C.   The company only has 300 labor hours...
ABC Company produces three products: A, B, and C.   The company only has 300 labor hours per week to produce these 3 products Product information is as follows: A B C Unit selling price 140 75 240 Unit variable costs 100 50 180 Unit contribution margin 40 25 60 Labor hours per unit 5 4 6 Maximum demand in units per week 15 20 30 Required: What is the optimal product mix(how many A, B, and C should be produced)...
The Noble Company manufactures two products. Information about the two products is as follows: Product A...
The Noble Company manufactures two products. Information about the two products is as follows: Product A Product B Selling price per unit $80 $30 Variable costs per unit 45 15 Contribution margin per unit $35 $15 The company expects the fixed costs to be $189,000. The firm expects 60% of its sales (in units) to be of Product A (a sales mix of 3:2). Required: A. Calculate the contribution margin per package. $ B. Determine the break-even point in units...
Using the information for Headley Company from the previous problem, now assume there are no market...
Using the information for Headley Company from the previous problem, now assume there are no market constraints for either product, leaving the 250,000 labor hours as the only constraint and that Headley will make optimal use of its labor.  In early November, Headley was invited to bid on a contract to provide 2,000 units of Product B. What is the minimum bid Headley would have to submit in order to breakeven on the contract? Product A                    Product B Per Unit Information: Selling...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000 machine hours per year. The following information is available for planning purposes: Product A Product B Product C demand for next year ............. 24,000 units 25,000 units 12,000 units selling price per unit ........... $80 $120 $160 direct material cost per unit .... $24 $ 21 $ 38 direct labor cost per unit ....... $18 $ 50 $ 38 variable overhead cost per unit...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000 machine hours per year. The following information is available for planning purposes: Product A Product B Product C demand for next year ............. 24,000 units 25,000 units 12,000 units selling price per unit ........... $80 $120 $160 direct material cost per unit .... $24 $ 21 $ 38 direct labor cost per unit ....... $18 $ 50 $ 38 variable overhead cost per unit...
Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating...
Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 8.00 $ 37.00 Variable expenses per unit $ 2.20 $ 12.00 Traceable fixed expenses per year $ 134,000 $ 41,000 Common fixed expenses in the company total $101,000 annually. Last year the company produced and sold 37,500 units of Weedban and 21,000 units of Greengrow. Required: Prepare a contribution format income statement...
Brevard Industries produces two products. Information about the products is as follows: Product 1 Product 2...
Brevard Industries produces two products. Information about the products is as follows: Product 1 Product 2 Units produced and sold 4,150 10,200 Selling price per unit $ 15 $ 13 Variable costs per unit 9 8 The company's fixed costs totaled $72,000, of which $15,200 can be directly traced to Product 1 and $40,200 can be directly traced to Product 2. The effect on the firm's profits if Product 2 is dropped would be a: $10,800 increase. $35,800 increase. $35,800...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT