Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 25, Problem 8BE
To determine
Ascertain the most profitable product by assuming that the testing is a production bottleneck.
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Olsen Company produces two products. Product A has a contribution margin of $30 and requires 10 machine hours. Product B has a contribution margin of $24 and requires 4 machine hours. Determine the more profitable product assuming the machine hours are the constraint.
Unit contribution margin per bottleneck hour:Product A $_____Product B $_____
Product ____ is most profitable.
Analyzing Income under Absorption and Variable Costing
Variable manufacturing costs are $86 per unit, and fixed manufacturing costs are $193,200. Sales are estimated to be 6,900 units.
If an amount is zero, enter "0". Round intermediate calculations to the nearest cent and your final answers to the nearest dollar.
a. How much would absorption costing operating income differ between a plan to produce 6,900 units and a plan to produce 9,200 units?
X
b. How much would variable costing operating income differ between the two production plans?
✓
Bottleneck Profit
Product K has a unit contribution margin of $360. Product L has a unit contribution margin of $300. Product K requires 5 furnace hours, while Product L requires 4 furnace hours.
Determine the most profitable product, assuming that the furnace is a production bottleneck. If required, round your answers to nearest dollar.
Product K
Product L
Which is the most profitable in using bottleneck resources?
Chapter 25 Solutions
Financial And Managerial Accounting
Ch. 25 - Explain the meaning of (A) differential revenue,...Ch. 25 - A company could sell a building for 250,000 or...Ch. 25 - A chemical company has a commodity-grade and...Ch. 25 - A company accepts incremental business at a...Ch. 25 - A company fabricates a component at a cost of...Ch. 25 - Prob. 6DQCh. 25 - In the long run, the normal selling price must be...Ch. 25 - Although the cost-plus approach to product pricing...Ch. 25 - How does the target cost method differ from...Ch. 25 - Prob. 10DQ
Ch. 25 - Lease or sell Plymouth Company owns equipment with...Ch. 25 - Prob. 2BECh. 25 - Make or buy A company manufactures various-sized...Ch. 25 - Replace equipment A machine with a book value of...Ch. 25 - Process or sell Product J19 is produced for 11 per...Ch. 25 - Prob. 6BECh. 25 - Product cost markup percentage Green Thumb Garden...Ch. 25 - Prob. 8BECh. 25 - Differential analysis for a lease or sell decision...Ch. 25 - Prob. 2ECh. 25 - Differential analysis for a discontinued product A...Ch. 25 - Differential analysis for a discontinued product...Ch. 25 - Prob. 5ECh. 25 - Decision to discontinue a product On the basis of...Ch. 25 - Make-or-buy decision Somerset Computer Company has...Ch. 25 - Make-or-buy decision for a service company The...Ch. 25 - Machine replacement decision A company is...Ch. 25 - Differential analysis for machine replacement...Ch. 25 - Sell or process further Calgary Lumber Company...Ch. 25 - Sell or process further Dakota Coffee Company...Ch. 25 - Decision on accepting additional business...Ch. 25 - Accepting business at a special price Box Elder...Ch. 25 - Prob. 15ECh. 25 - Product cost method of product pricing La Femme...Ch. 25 - Product cost method of product costing Smart...Ch. 25 - Target costing Toyota Motor Corporation (TM) uses...Ch. 25 - Target costing Instant Image Inc. manufactures...Ch. 25 - Product decisions under bottlenecked operations...Ch. 25 - Prob. 21ECh. 25 - Total cost method of product pricing Based on the...Ch. 25 - Variable cost method of product pricing Based on...Ch. 25 - Differential analysis involving opportunity costs...Ch. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Prob. 4PACh. 25 - Prob. 5PACh. 25 - Product pricing using the cost-plus approach...Ch. 25 - Differential analysis involving opportunity costs...Ch. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Differential analysis for further processing The...Ch. 25 - Prob. 5PBCh. 25 - Product pricing using the cost-plus approach...Ch. 25 - Analyze Pacific Airways Pacific Airways provides...Ch. 25 - Service yield pricing and differential equations...Ch. 25 - Prob. 3MADCh. 25 - Service yield pricing and differential analysis...Ch. 25 - Aaron McKinney is a cost accountant for Majik...Ch. 25 - Prob. 3TIFCh. 25 - Prob. 4TIFCh. 25 - Accepting service business at a special price If...Ch. 25 - Prob. 6TIFCh. 25 - In differential cost analysis, which one of the...Ch. 25 - Prob. 2CMACh. 25 - Prob. 3CMACh. 25 - Oakes Inc. manufactured 40,000 gallons of Mononate...
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Similar questions
- The profit function for two products is: Profit3x12+42x13x22+48x2+700, where x1 represents units of production of product 1, and x2 represents units of production of product 2. Producing one unit of product 1 requires 4 labor-hours, and producing one unit of product 2 requires 6 labor-hours. Currently, 24 labor-hours are available. The cost of labor-hours is already factored into the profit function, but it is possible to schedule overtime at a premium of 5 per hour. a. Formulate an optimization problem that can be used to find the optimal production quantity of products 1 and 2 and the optimal number of overtime hours to schedule. b. Solve the optimization model you formulated in part (a). How much should be produced and how many overtime hours should be scheduled?arrow_forwardBottleneck Profit Product K has a unit contribution margin of $120. Product L has a unit contribution margin of $100. Product K requires five furnace hours, while Product L requires four furnace hours. Determine the unit contribution margin per production bottleneck hour for each product, assuming the furnace is a bottleneck constraint. Product K $fill in the blank 1 Product L $fill in the blank 2 is the most profitable in using bottleneck resources.arrow_forwardBottleneck Profit Product K has a unit contribution margin of $120. Product L has a unit contribution margin of $100. Product K requires five furnace hours, while Product L requires four furnace hours. Determine the unit contribution margin per production bottleneck hour for each product, assuming the furnace is a bottleneck constraint. Product K $ Product L $ is the most profitable in using bottleneck resources.arrow_forward
- Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $85 per unit, and fixed manufacturing costs are $125,400. Sales are estimated to be 5,500 units. If an amount is zero, enter "0". Round intermediate calculations to the nearest cent and your final answers to the nearest dollar. a. How much would absorption costing operating income differ between a plan to produce 5,500 units and a plan to produce 6,600 units? b. How much would variable costing operating income differ between the two production plans? Feedbackarrow_forwardAnalyzing Income under Absorption and Variable Costing Variable manufacturing costs are $101 per unit, and fixed manufacturing costs are $128,700. Sales are estimated to be 7,800 units. If an amount is zero, enter "0". Round intermediate calculations to the nearest cent and your final answers to the nearest dollar. a. How much would absorption costing operating income differ between a plan to produce 7,800 units and a plan to produce 9,900 units? b. How much would variable costing operating income differ between the two production plans? $ 0arrow_forwardA companys product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit? A. $40 B. $60 C. $90 D. $150arrow_forward
- Lotts Company produces and sells one product. The selling price is 10, and the unit variable cost is 6. Total fixed cost is 10,000. Required: 1. Prepare a CVP graph with Units Sold as the horizontal axis and Dollars as the vertical axis. Label the break-even point on the horizontal axis. 2. Prepare CVP graphs for each of the following independent scenarios: (a) Fixed cost increases by 5,000, (b) Unit variable cost increases to 7, (c) Unit selling price increases to 12, and (d) Fixed cost increases by 5,000 and unit variable cost is 7.arrow_forwardSuppose that a company has fixed costs of $11 per unit and variable costs $6 per unit when 11,000 units are produced. What are the fixed costs per unit when 20,000 units are produced?arrow_forwardDescribe the cost formula for a strictly variable cost such as electrical power cost of 1.15 per machine hour (i.e., every hour the machinery is run, electrical power cost goes up by 1.15).arrow_forward
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