Wehrs Corporation has received a request for a special order of 6,000 units of product K19 for $32.30 each
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146. Wehrs Corporation has
received a request for a special order of 6,000 units of product K19 for $32.30
each. The normal selling price of this product is $33.45 each, but the units
would need to be modified slightly for the customer. The normal unit product
cost of product K19 is computed as follows:
Direct materials……………………………………
$15.00
Direct labor…………………………………………
3.80
Variable
manufacturing overhead…………..
1.40
Fixed
manufacturing overhead………………
2.10
Unit product cost…………………………………
$22.30
Direct labor is a
variable cost. The special order would have no effect on the company’s total
fixed manufacturing overhead costs. The customer would like some modifications
made to product K19 that would increase the variable costs by $4.90 per unit
and that would require a one-time investment of $23,000 in special molds that
would have no salvage value. This special order would have no effect on the
company’s other sales. The company has ample spare capacity for producing the
special order.
Required:
Determine the
effect on the company’s total net operating income of accepting the special
order. Show your work!
147. A customer has asked Lalka Corporation to supply 3,000 units of
product H60, with some modifications, for $34.70 each. The normal selling price
of this product is $46.35 each. The normal unit product cost of product H60 is
computed as follows:
Direct materials…………………………………..
$14.70
Direct labor…………………………………………
1.30
Variable
manufacturing overhead………….
7.00
Fixed
manufacturing overhead……………..
7.90
Unit product cost………………………………..
$30.90
Direct labor is a
variable cost. The special order would have no effect on the company’s total
fixed manufacturing overhead costs. The customer would like some modifications
made to product H60 that would increase the variable costs by $3.80 per unit
and that would require a one-time investment of $24,000 in special molds that
would have no salvage value. This special order would have no effect on the
company’s other sales. The company has ample spare capacity for producing the
special order.
Required:
Determine the
effect on the company’s total net operating income of accepting the special
order. Show your work!
148. Gloddy Company makes three products in a single facility. These
products have the following unit product costs:
Product A
Product B
Product C
Direct materials……………………………
$24.90
$25.70
$26.60
Direct labor…………………………………
13.30
17.10
15.70
Variable
manufacturing overhead…..
2.50
2.80
3.10
Fixed
manufacturing overhead………
19.80
27.70
21.00
Unit product cost…………………………
$60.50
$73.30
$66.40
Additional data
concerning these products are listed below.
Product A
Product B
Product C
Mixing minutes per
unit………………..
2.50
1.70
1.60
Selling price per
unit…………………….
$71.50
$87.90
$83.00
Variable selling
cost per unit………….
$2.30
$1.90
$3.80
Monthly demand in
units………………
1,000
3,000
3,000
The mixing machines
are potentially the constraint in the production facility. A total of 10,800
minutes are available per month on these machines.
Direct labor is a
variable cost in this company.
Required:
a.
How many minutes of mixing machine
time would be required to satisfy demand for all four products?
b.
How much of each product should
be produced to maximize net operating income? (Round off to the nearest whole
unit.)
c.
Up to how much should the
company be willing to pay for one additional hour of mixing machine time if the
company has made the best use of the existing mixing machine capacity? (Round
off to the nearest whole cent.)
149. Holzmeyer Company makes three products in a single facility. Data
concerning these products follow:
Product A
Product B
Product C
Selling price per
unit…………………….
$64.50
$64.80
$63.30
Direct materials……………………………
$20.90
$14.50
$18.30
Direct labor…………………………………
$30.80
$33.40
$26.00
Variable
manufacturing overhead…..
$1.60
$1.90
$2.10
Variable selling
cost per unit………….
$1.00
$3.40
$1.50
Mixing minutes per
unit………………..
3.50
3.10
3.50
Monthly demand in
units………………
4,000
2,000
4,000
The mixing machines
are potentially the constraint in the production facility. A total of 32,400
minutes are available per month on these machines.
Direct labor is a
variable cost in this company.
Required:
a.
How many minutes of mixing
machine time would be required to satisfy demand for all four products?
b.
How much of each product should
be produced to maximize net operating income? (Round off to the nearest whole
unit.)
c.
Up to how much should the
company be willing to pay for one additional hour of mixing machine time if the
company has made the best use of the existing mixing machine capacity? (Round
off to the nearest whole cent.)
150. Garson, Inc. produces three products. Data concerning the selling
prices and unit costs of the three products appear below:
Product F
Product G
Product H
Selling price……………………………..
$50
$80
$70
Variable costs……………………………
$40
$50
$55
Fixed costs……………………………….
$15
$20
$12
Milling machine
time (minutes)…..
4
2
5
Fixed costs are
applied to the products on the basis of direct labor hours.
Demand for the
three products exceeds the company’s productive capacity. The milling machine
is the constraint, with only 2,400 minutes of milling machine time available
this week.
Required:
a.
Given the milling machine
constraint, which product should be emphasized? Support your answer with
appropriate calculations.
b.
Assuming that there is still
unfilled demand for the product that the company should emphasize in part (a)
above, up to how much should the company be willing to pay for an additional
hour of milling machine time?
151. Brissett Corporation makes three products that use the current
constraint, which is a particular type of machine. Data concerning those
products appear below:
GK
LQ
XK
Selling price per
unit………………….
$119.51
$226.07
$228.96
Variable cost per
unit…………………
$89.87
$176.86
$178.92
Time on the
constraint (minutes)…
1.90
3.70
3.60
Required:
a.
Rank the products in order of
their current profitability from the most profitable to the least profitable.
In other words, rank the products in the order in which they should be emphasized.
Show your work!
b.
Assume that sufficient
constraint time is available to satisfy demand for all but the least profitable
product. Up to how much should the company be willing to pay to acquire more of
the constrained resource?
152. The constraint at Dreyfus Inc. is an expensive milling machine. The
three products listed below use this constrained resource.
VY
QX
AM
Selling price per
unit…………………….
$78.65
$421.59
$145.92
Variable cost per
unit……………………
$62.40
$331.20
$113.28
Time on the
constraint (minutes)……
1.30
6.90
2.40
Required:
a.
Rank the products in order of
their current profitability from the most profitable to the least profitable.
In other words, rank the products in the order in which they should be
emphasized. Show your work!
b.
Assume that sufficient
constraint time is available to satisfy demand for all but the least profitable
product. Up to how much should the company be willing to pay to acquire more of
the constrained resource?
153. Iaria Corporation makes two products from a common input. Joint
processing costs up to the split-off point total $33,600 a year. The company
allocates these costs to the joint products on the basis of their total sales
values at the split-off point. Each product may be sold at the split-off point
or processed further. Data concerning these products appear below:
Product X
Product Y
Allocated joint
processing costs……….
$19,600
$14,000
Sales value at
split-off point…………….
$28,000
$20,000
Costs of further
processing………………
$22,400
$15,700
Sales value after
further processing…..
$53,500
$33,500
Required:
a.
What is the net monetary
advantage (disadvantage) of processing Product X beyond the split-off point?
b.
What is the net monetary advantage
(disadvantage) of processing Product Y beyond the split-off point?
c.
What is the minimum amount the
company should accept for Product X if it is to be sold at the split-off point?
d.
What is the minimum amount the
company should accept for Product Y if it is to be sold at the split-off point?
154. Prosner Corp. manufactures three products from a common input in a
joint processing operation. Joint processing costs up to the split-off point
total $500,000 per year. The company allocates these costs to the joint
products on the basis of their total sales value at the split-off point.
Each product may be
sold at the split-off point or processed further. The additional processing
costs and sales value after further processing for each product (on an annual
basis) are:
Sales Value at Split-Off
Further Processing Costs
Sales Value After Further Processing
Product D…..
$300,000
$125,000
$534,000
Product F……
$275,000
$210,000
$450,000
Product G…..
$195,000
$135,000
$360,000
The Further
Processing Costs consist of variable and avoidable fixed costs.
Required:
Which product or
products should be sold at the split-off point, and which product or products
should be processed further? Show computations.
155. Swagger Corporation purchases potatoes from farmers. The potatoes
are then peeled, producing two intermediate products-peels and depeeled spuds.
The peels can then be processed further to make a cocktail of organic
nutrients. And the depeeled spuds can be processed further to make frozen
french fries. A batch of potatoes costs $63 to buy from farmers and $12 to peel
in the company’s plant. The peels produced from a batch can be sold as is for
animal feed for $29 or processed further for $15 to make the cocktail of
nutrients that are sold for $41. The depeeled spuds can be sold as is for $40
or processed further for $22 to make frozen french fries that are sold for $77.
Required:
a.
Assuming that no other costs
are involved in processing potatoes or in selling products, how much money does
the company make from processing one batch of potatoes into the cocktail of
organic nutrients and frozen french fries? Show your work!
b.
Should each of the intermediate
products, peels and depeeled spuds, be sold as is or processed further into an
end product? Explain.
156. Farrugia Corporation produces two intermediate products, A and B,
from a common input. Intermediate product A can be further processed into end
product X. Intermediate product B can be further processed into end product Y.
The common input is purchased in batches that cost $36 each and the cost of
processing a batch to produce intermediate products A and B is $15.
Intermediate product A can be sold as is for $21 or processed further for $14
to make end product X that is sold for $32. Intermediate product B can be sold
as is for $44 or processed further for $28 to make end product Y that is sold
for $64.
Required:
a.
Assuming that no other costs
are involved in processing potatoes or in selling products, how much money does
the company make from processing one batch of the common input into the end
products X and Y? Show your work!
b.
Should each of the intermediate
products, A and B, be sold as is or processed further into an end product?
Explain.
146. Wehrs Corporation has
received a request for a special order of 6,000 units of product K19 for $32.30
each. The normal selling price of this product is $33.45 each, but the units
would need to be modified slightly for the customer. The normal unit product
cost of product K19 is computed as follows: Direct materials……………………………………$15.00Direct labor…………………………………………3.80Variable
manufacturing overhead…………..1.40Fixed
manufacturing overhead……………… 2.10Unit product cost…………………………………$22.30 Direct labor is a
variable cost. The special order would have no effect on the company’s total
fixed manufacturing overhead costs. The customer would like some modifications
made to product K19 that would increase the variable costs by $4.90 per unit
and that would require a one-time investment of $23,000 in special molds that
would have no salvage value. This special order would have no effect on the
company’s other sales. The company has ample spare capacity for producing the
special order. Required: Determine the
effect on the company’s total net operating income of accepting the special
order. Show your work! 147. A customer has asked Lalka Corporation to supply 3,000 units of
product H60, with some modifications, for $34.70 each. The normal selling price
of this product is $46.35 each. The normal unit product cost of product H60 is
computed as follows: Direct materials…………………………………..$14.70Direct labor…………………………………………1.30Variable
manufacturing overhead………….7.00Fixed
manufacturing overhead…………….. 7.90Unit product cost………………………………..$30.90 Direct labor is a
variable cost. The special order would have no effect on the company’s total
fixed manufacturing overhead costs. The customer would like some modifications
made to product H60 that would increase the variable costs by $3.80 per unit
and that would require a one-time investment of $24,000 in special molds that
would have no salvage value. This special order would have no effect on the
company’s other sales. The company has ample spare capacity for producing the
special order. Required: Determine the
effect on the company’s total net operating income of accepting the special
order. Show your work! 148. Gloddy Company makes three products in a single facility. These
products have the following unit product costs: Product AProduct BProduct CDirect materials……………………………$24.90$25.70$26.60Direct labor…………………………………13.3017.1015.70Variable
manufacturing overhead…..2.502.803.10Fixed
manufacturing overhead……… 19.80 27.70 21.00Unit product cost…………………………$60.50$73.30$66.40Additional data
concerning these products are listed below.Product AProduct BProduct CMixing minutes per
unit………………..2.501.701.60Selling price per
unit…………………….$71.50$87.90$83.00Variable selling
cost per unit………….$2.30$1.90$3.80Monthly demand in
units………………1,0003,0003,000 The mixing machines
are potentially the constraint in the production facility. A total of 10,800
minutes are available per month on these machines. Direct labor is a
variable cost in this company. Required: a.
How many minutes of mixing machine
time would be required to satisfy demand for all four products?b.
How much of each product should
be produced to maximize net operating income? (Round off to the nearest whole
unit.)c.
Up to how much should the
company be willing to pay for one additional hour of mixing machine time if the
company has made the best use of the existing mixing machine capacity? (Round
off to the nearest whole cent.) 149. Holzmeyer Company makes three products in a single facility. Data
concerning these products follow: Product AProduct BProduct CSelling price per
unit…………………….$64.50$64.80$63.30Direct materials……………………………$20.90$14.50$18.30Direct labor…………………………………$30.80$33.40$26.00Variable
manufacturing overhead…..$1.60$1.90$2.10Variable selling
cost per unit………….$1.00$3.40$1.50Mixing minutes per
unit………………..3.503.103.50Monthly demand in
units………………4,0002,0004,000 The mixing machines
are potentially the constraint in the production facility. A total of 32,400
minutes are available per month on these machines. Direct labor is a
variable cost in this company. Required: a.
How many minutes of mixing
machine time would be required to satisfy demand for all four products?b.
How much of each product should
be produced to maximize net operating income? (Round off to the nearest whole
unit.)c.
Up to how much should the
company be willing to pay for one additional hour of mixing machine time if the
company has made the best use of the existing mixing machine capacity? (Round
off to the nearest whole cent.) 150. Garson, Inc. produces three products. Data concerning the selling
prices and unit costs of the three products appear below: Product FProduct GProduct HSelling price……………………………..$50$80$70Variable costs……………………………$40$50$55Fixed costs……………………………….$15$20$12Milling machine
time (minutes)…..425 Fixed costs are
applied to the products on the basis of direct labor hours. Demand for the
three products exceeds the company’s productive capacity. The milling machine
is the constraint, with only 2,400 minutes of milling machine time available
this week. Required: a.
Given the milling machine
constraint, which product should be emphasized? Support your answer with
appropriate calculations.b.
Assuming that there is still
unfilled demand for the product that the company should emphasize in part (a)
above, up to how much should the company be willing to pay for an additional
hour of milling machine time? 151. Brissett Corporation makes three products that use the current
constraint, which is a particular type of machine. Data concerning those
products appear below: GKLQXKSelling price per
unit………………….$119.51$226.07$228.96Variable cost per
unit…………………$89.87$176.86$178.92Time on the
constraint (minutes)…1.903.703.60 Required: a.
Rank the products in order of
their current profitability from the most profitable to the least profitable.
In other words, rank the products in the order in which they should be emphasized.
Show your work!b.
Assume that sufficient
constraint time is available to satisfy demand for all but the least profitable
product. Up to how much should the company be willing to pay to acquire more of
the constrained resource? 152. The constraint at Dreyfus Inc. is an expensive milling machine. The
three products listed below use this constrained resource. VYQXAMSelling price per
unit…………………….$78.65$421.59$145.92Variable cost per
unit……………………$62.40$331.20$113.28Time on the
constraint (minutes)……1.306.902.40 Required: a.
Rank the products in order of
their current profitability from the most profitable to the least profitable.
In other words, rank the products in the order in which they should be
emphasized. Show your work!b.
Assume that sufficient
constraint time is available to satisfy demand for all but the least profitable
product. Up to how much should the company be willing to pay to acquire more of
the constrained resource? 153. Iaria Corporation makes two products from a common input. Joint
processing costs up to the split-off point total $33,600 a year. The company
allocates these costs to the joint products on the basis of their total sales
values at the split-off point. Each product may be sold at the split-off point
or processed further. Data concerning these products appear below: Product XProduct YAllocated joint
processing costs……….$19,600$14,000Sales value at
split-off point…………….$28,000$20,000Costs of further
processing………………$22,400$15,700Sales value after
further processing…..$53,500$33,500 Required: a.
What is the net monetary
advantage (disadvantage) of processing Product X beyond the split-off point?b.
What is the net monetary advantage
(disadvantage) of processing Product Y beyond the split-off point?c.
What is the minimum amount the
company should accept for Product X if it is to be sold at the split-off point?d.
What is the minimum amount the
company should accept for Product Y if it is to be sold at the split-off point? 154. Prosner Corp. manufactures three products from a common input in a
joint processing operation. Joint processing costs up to the split-off point
total $500,000 per year. The company allocates these costs to the joint
products on the basis of their total sales value at the split-off point. Each product may be
sold at the split-off point or processed further. The additional processing
costs and sales value after further processing for each product (on an annual
basis) are:Sales Value at Split-OffFurther Processing CostsSales Value After Further ProcessingProduct D…..$300,000$125,000$534,000Product F……$275,000$210,000$450,000Product G…..$195,000$135,000$360,000 The Further
Processing Costs consist of variable and avoidable fixed costs. Required: Which product or
products should be sold at the split-off point, and which product or products
should be processed further? Show computations. 155. Swagger Corporation purchases potatoes from farmers. The potatoes
are then peeled, producing two intermediate products-peels and depeeled spuds.
The peels can then be processed further to make a cocktail of organic
nutrients. And the depeeled spuds can be processed further to make frozen
french fries. A batch of potatoes costs $63 to buy from farmers and $12 to peel
in the company’s plant. The peels produced from a batch can be sold as is for
animal feed for $29 or processed further for $15 to make the cocktail of
nutrients that are sold for $41. The depeeled spuds can be sold as is for $40
or processed further for $22 to make frozen french fries that are sold for $77. Required: a.
Assuming that no other costs
are involved in processing potatoes or in selling products, how much money does
the company make from processing one batch of potatoes into the cocktail of
organic nutrients and frozen french fries? Show your work!b.
Should each of the intermediate
products, peels and depeeled spuds, be sold as is or processed further into an
end product? Explain. 156. Farrugia Corporation produces two intermediate products, A and B,
from a common input. Intermediate product A can be further processed into end
product X. Intermediate product B can be further processed into end product Y.
The common input is purchased in batches that cost $36 each and the cost of
processing a batch to produce intermediate products A and B is $15.
Intermediate product A can be sold as is for $21 or processed further for $14
to make end product X that is sold for $32. Intermediate product B can be sold
as is for $44 or processed further for $28 to make end product Y that is sold
for $64. Required: a.
Assuming that no other costs
are involved in processing potatoes or in selling products, how much money does
the company make from processing one batch of the common input into the end
products X and Y? Show your work!b.
Should each of the intermediate
products, A and B, be sold as is or processed further into an end product?
Explain.
