Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Chapter 7, Problem 11E
To determine
Concept introduction:
Decision making plays an important role in the management. The decisions taken by managers are called managerial decisions. Managerial Decisions are decisions taken by managers for the operations of a firm. These decisions include setting target growth rates, hiring or firing employees, and deciding what products to sell. Manager’s decisions are taken on the basis of quantitative as well as the qualitative measures. The managerial decision includes the decisions like make or buy, accept or reject new offers, sell or further process etc. These decisions are taken on the basis of relevant costs.
Relevant costs are the costs that are relevant for any decision making. Relevant costs are helpful for take managerial decisions like make or buy, accept or reject new offers, sell or further process etc.
Two basic types of the relevant costs are as follows:
- Out-of-pocket costs
- Opportunity costs
To calculate:
The number of units of each product to be produced to maximize the profit
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Students have asked these similar questions
Determining the Optimal Product Mix with One Constrained Resource and a Sales Constraint
Casual Essentials, Inc. manufactures two types of team shirts, the Homerun and the Goalpost, with unit contribution margins of $5
and $15, respectively. Regardless of type, each team shirts must be fed through a stitching machine to affix the appropriate team
logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Homerun shirt requires 6
minutes of machine time, and each Goalpost shirt requires 30 minutes of machine time.
Assume that a maximum of 48,990 units of each team shirts can be sold.
Required:
If required, round your answers to the nearest whole number.
1. What is the contribution margin per hour of machine time for each type of team shirts?
Contribution Margin
Homerun
Goalpost
2. What is the optimal mix of team shirts?
Optimal Mix
Homerun
units
Goalpost
units
3. What is the total contribution margin earned for the optimal mix?
Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products
follows:
Sales price
Variable costs per unit
Fixed costs per unit
Required number of labor hours
Product A
Product B
Product C
Cordova currently is limited to 50,000 labor hours per month.
Required:
Assuming an infinite demand for each of Cordova's products, determine contribution margin per direct labor hour. (Round your
answers to 2 decimal places.)
Contribution Margin
Product B
Ⓒ Product C
O Product A
Product A Product B Product C
$46.00
$56.00
$86.00
22.00
12.25
38.00
8.00
8.00
2.50
4.00
$
$
$
8.00
1.50
14.67 CM per DL hour
13.12 CM per DL hour
15.25 CM per DL hour
Which product would be Cordova's first choice to produce?
Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows:
Product A
Product B
Product C
Sales price
$
35
$
45
$
75
Variable costs per unit
17
21
32
Fixed costs per unit
5
5
5
Required number of labor hours
1.25
2.00
2.50
Cordova currently is limited to 40,000 labor hours per month. Required: Assuming an infinite demand for each of Cordova’s products, determine contribution margin per direct labor hour. (Round your answers to 2 decimal place.)
Product A
Product B
Product C
Chapter 7 Solutions
Managerial Accounting
Ch. 7 - Briefly describe the five steps of the management...Ch. 7 - Suppose you are considering a part-time job to...Ch. 7 - Prob. 3QCh. 7 - What are criteria for a cost to be considered...Ch. 7 - Prob. 5QCh. 7 - Explain opportunity cost and list two opportunity...Ch. 7 - Why should opportunity costs be factored into the...Ch. 7 - Explain excess capacity and full capacity. Include...Ch. 7 - How e the concepts of full capacity and...Ch. 7 - Prob. 10Q
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Suppose that you the manager of a local deli. Give...Ch. 7 - Prob. 14QCh. 7 - Prob. 15QCh. 7 - Prob. 16QCh. 7 - Prob. 17QCh. 7 - Briefly explain what happens to total variable...Ch. 7 - Prob. 19QCh. 7 - Prob. 20QCh. 7 - Prob. 21QCh. 7 - Prob. 1MCCh. 7 - Prob. 2MCCh. 7 - Prob. 3MCCh. 7 - Prob. 4MCCh. 7 - Prob. 5MCCh. 7 - Which of the following costs is not likely to be...Ch. 7 - Which of the following causes opportunity costs to...Ch. 7 - Prob. 8MCCh. 7 - Prob. 9MCCh. 7 - Prob. 10MCCh. 7 - Matching Key Terms and Concepts to Definitions A...Ch. 7 - Prob. 2MECh. 7 - Prob. 3MECh. 7 - Prob. 4MECh. 7 - Prob. 5MECh. 7 - Prob. 6MECh. 7 - Prob. 7MECh. 7 - Prob. 8MECh. 7 - Prob. 10MECh. 7 - Prob. 11MECh. 7 - Identifying Steps in Decision-Making Process...Ch. 7 - Identifying Steps in Decision-Making Process and...Ch. 7 - Identifying Relevant Costs and Calculating...Ch. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Analyzing Keep-or-Drop Decision MSI is consider...Ch. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 1.1GAPCh. 7 - Prob. 1.2GAPCh. 7 - Prob. 1.3GAPCh. 7 - Prob. 1.4GAPCh. 7 - Prob. 2.1GAPCh. 7 - Prob. 2.2GAPCh. 7 - Prob. 2.3GAPCh. 7 - Prob. 2.4GAPCh. 7 - Prob. 2.5GAPCh. 7 - Prob. 3.1GAPCh. 7 - Prob. 3.2GAPCh. 7 - Prob. 3.3GAPCh. 7 - Prob. 4.1GAPCh. 7 - Prob. 4.2GAPCh. 7 - Prob. 4.3GAPCh. 7 - Prob. 5GAPCh. 7 - Prob. 6.1GAPCh. 7 - Prob. 6.2GAPCh. 7 - Prob. 6.3GAPCh. 7 - Prob. 6.4GAPCh. 7 - Prob. 7.1GAPCh. 7 - Prob. 7.2GAPCh. 7 - Prob. 7.3GAPCh. 7 - Analyzing Special-Order Decision Camino Company...Ch. 7 - Prob. 8.2GAPCh. 7 - Analyzing Special-Order Decision Camino Company...Ch. 7 - Analyzing Make-or-Buy Decision Old Camp Company...Ch. 7 - Prob. 9.2GAPCh. 7 - Prob. 9.3GAPCh. 7 - Prob. 1.1GBPCh. 7 - Prob. 1.2GBPCh. 7 - Prob. 1.3GBPCh. 7 - Prob. 1.4GBPCh. 7 - Prob. 2.1GBPCh. 7 - Prob. 2.2GBPCh. 7 - Analyzing Make-or-Buy Decision Greenview Corp....Ch. 7 - Prob. 2.4GBPCh. 7 - Prob. 2.5GBPCh. 7 - Prob. 3.1GBPCh. 7 - Prob. 3.2GBPCh. 7 - Prob. 3.3GBPCh. 7 - Prob. 4.1GBPCh. 7 - Prob. 4.2GBPCh. 7 - Prob. 4.3GBPCh. 7 - Prob. 5GBPCh. 7 - Prob. 6.1GBPCh. 7 - Prob. 6.2GBPCh. 7 - Prob. 6.3GBPCh. 7 - Prob. 6.4GBPCh. 7 - Analyzing Sell-or-Process-Further Decision Golden...Ch. 7 - Prob. 7.2GBPCh. 7 - Prob. 7.3GBPCh. 7 - Prob. 8.1GBPCh. 7 - Prob. 8.2GBPCh. 7 - Prob. 8.3GBPCh. 7 - Analyzing Make-or-Buy Decision Gold Dust Co....Ch. 7 - Prob. 9.2GBPCh. 7 - Prob. 9.3GBP
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