Problems Al applicae P N availuble in Connect. Kitchen Magician, Inc. has assembled the following data pertaining to its two most popular products. Blender Electric Mixer Direct material $6 $11 Direct labor 4. 96. Manufacturing overhead e $16 per machine hour 16 32 Cost if purchased from an outside supplier 20 38 Annual demand (units) 20 000 28.000 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $10. Kitchen Magician's management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 50,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? With all other things constant,. if management is able to reduce the direct material for an electric mixer to $6 per unit, how many units of each product should be manufactured? Purchased? 2. 3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: the unit cost if purchased from an outside supplier is $22 for the blender and $40 for the electric mixer. (CMA adapted)
Problems Al applicae P N availuble in Connect. Kitchen Magician, Inc. has assembled the following data pertaining to its two most popular products. Blender Electric Mixer Direct material $6 $11 Direct labor 4. 96. Manufacturing overhead e $16 per machine hour 16 32 Cost if purchased from an outside supplier 20 38 Annual demand (units) 20 000 28.000 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $10. Kitchen Magician's management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 50,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? With all other things constant,. if management is able to reduce the direct material for an electric mixer to $6 per unit, how many units of each product should be manufactured? Purchased? 2. 3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: the unit cost if purchased from an outside supplier is $22 for the blender and $40 for the electric mixer. (CMA adapted)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problems
Al applicae ub
availuble in Connect
Kitchen Magician, Inc. has assembled he following data pertaining to its two most popular products.
Pro
Product
Blender
Capacit
(LO 14-
Electric Mixer
Direct material
$6
$11
Direct labor
4.
Manufacturing overhead e $16 per machine hour
16
32
Cost if purchased from an outside supplier
Annual demand (units)
20
38
20 000
28.000
Past experience has shown that the fixed manufacturing overhead component included in the cost
per machine hour averages $10. Kitchen Magician's management has a policy of filling all sales orders,
even if it means purchasing units from outside suppliers.
Required:
1. If 50,000 machine hours are available, and management desires to follow an optimal strategy, how
many units of each product should the firm manufacture? How many units of each product should
be purchased?
2. With all other things constant, if management is able to reduce the direct material for an electric
mixer to $6 per unit, how many units of each product should be manufactured? Purchased?
3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how
the solution will change if the following information changes: the unit cost if purchased from an
outside supplier is $22 for the blender and $40 for the electric mixer.
(CMA adapted)
Jupiter Corporation manufactures skateboards. Several weeks ago, the firm received a special-order
Proble
Spocial O
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