Product Decisions Under Bottlenecked Operations Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows: Type 5 Type 10 Type 20 $56,500 $43,000 $49,000 $(34,000) $(28,000) $(26,500) (8,000) (8,000) $(42,000) $(34,500) $1,000 + 5,000 $22,000 +5,000 $ 0.20 $4.40 Revenues Variable cost Fixed cost Total cost (8,000) $(36,000) Operating income $13,000 +5,000 Number of units Operating income per unit $ 2.60 Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follow Type 5: 6 hours Type 10: Type 20: The Marketing Department is considering a new marketing and sales campaign. 6 hours 12 hours Determining the unit contribution margin per furnace hour will assist in making your decision. Round the unit contribution margin to two decimal places. Type 5 Type 10 Type 20 Unit contribution margin per furnace hour Which product should be emphasized in the marketing and sales campaign in order to maximize profitability?

Product Decisions Under Bottlenecked Operations Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows: Type 5 Type 10 Type 20 $56,500 $43,000 $49,000 $(34,000) $(28,000) $(26,500) (8,000) (8,000) $(42,000) $(34,500) $1,000 + 5,000 $22,000 +5,000 $ 0.20 $4.40 Revenues Variable cost Fixed cost Total cost (8,000) $(36,000) Operating income $13,000 +5,000 Number of units Operating income per unit $ 2.60 Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follow Type 5: 6 hours Type 10: Type 20: The Marketing Department is considering a new marketing and sales campaign. 6 hours 12 hours Determining the unit contribution margin per furnace hour will assist in making your decision. Round the unit contribution margin to two decimal places. Type 5 Type 10 Type 20 Unit contribution margin per furnace hour Which product should be emphasized in the marketing and sales campaign in order to maximize profitability?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter25: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 20E: Product decisions under bottlenecked operations Mill Metals Inc. has three grades of metal product,...

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Product Decisions Under Bottlenecked Operations Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows: Type 5 Type 10 Type 20 $43,000 Revenues $49,000 $56,500 Variable cost Fixed cost Total cost $34,000 $26,500 $28,000 8,000 8,000 8,000 $36,000 $34,500 $42,000 Income from operations $ 1,000 $13,000 $22,000 + 5,000 $ 2.60 Number of units + 5,000 + 5,000 Income from operations per unit $ 0.20 $ 4.40 Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follows: Type 5: 6 hours Type 10: 6 hours Type 20: 12 hours The Marketing Department is considering a new marketing and sales campaign. Which product should be emphasized in the marketing and sales campaign in order to maximize profitability? Determining the unit contribution margin per…
Product Decisions Under Bottlenecked Operations Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows: Type 5 Type 10 Type 20 Revenues $43,000 $49,000 $56,500 Variable cost $34,000 $28,000 $26,500 Fixed cost 8,000 8,000 8,000 Total cost $42,000 $36,000 $34,500 Income from operations $ 1,000 $13,000 $22,000 Number of units ÷ 5,000 ÷ 5,000 ÷ 5,000 Income from operations per unit $ 0.20 $ 2.60 $ 4.40 Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follows: Type 5: 6 hours Type 10: 6 hours Type 20: 12 hours The Marketing Department is considering a new marketing and sales campaign. Which product should be emphasized in the marketing and sales campaign…
Product Decisions Under Bottlenecked Operations Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows: Type 5 Туре 10 Туре 20 Revenues $43,000 $49,000 $56,500 Variable cost $(34,000) $(28,000) $(26,500) Fixed cost (8,000) (8,000) (8,000) Total cost $(42,000) $(36,000) $(34,500) Operating income $ 1,000 $13,000 $2,000 + 5,000 $ 2.60 + 5,000 $ 4.40 + 5,000 Number of units Operating income per unit $ 0.20 Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follows: Type 5: 6 hours Туре 10: 6 hours Туре 20: 12 hours The Marketing Department is considering a new marketing and sales campaign. Determining the unit contribution margin per furnace hour will assist in making your decision. Round the unit contribution margin to two decimal…
Product decisions under bottlenecked operations Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows: Mills operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follows: The Marketing Department is considering a new marketing and sales campaign. Which product should be emphasized in the marketing and sales campaign in order to maximize profitability?
Martin Incorporated provided the following information regarding its only product: Sale price per unit Direct materials used Direct labor incurred Variable manufacturing overhead Variable selling and administrative expenses Fixed manufacturing overhead Fixed selling and administrative expenses Units produced and sold Assume no beginning inventory $50.00 $16,300 $189,000 $124,000 $72,000 $65,000 $12,000 Decrease by $77,150 Increase by $82,650 Increase by $135,000 Increase by $77,150 23,000 Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 3000 units at a sale price of $45 per product assuming additional fixed manufacturing overhead costs of $5500 is incurred? (NOTE: Assume regular sales are not affected by the special order. Round any intermediary calculations to the nearest cent.)
King Company has two divisions whose most recent financial statements are shown below: Residential Division Commercial Division 5,340 $417,000 Unit sales Sales Less: cost of goods sold: Unit-level production costs Depreciation, production equipment Gross margin Less: operating expenses: Unit-level selling and administrative Corporate-level facility costs (fixed) Net income (loss) Unit sales Sales Less: cost of goods sold: Unit-level production costs Depreciation, production equipment Required: a. Compute the impact on profit if the Residential Division is eliminated. Gross margin Less: operating expenses: Unit-level selling and administrative Corporate-level facility costs (fixed) Net income (loss) 176,700 83,500 $156,800 Commercial Division Yes No 41,700 21,000 $94, 100 b. Do you recommend that King eliminate the Residential Division? 1,340 $117,000 61,700 33,500 $21,800 11,700 16,000 $(5,900)
II. AJA Company has two service departments (A and B) and two producing departments (X and Y). Data provided are as follows: Service Departments Operating Departments Y A В Direct Costs P150 P300 P5,000 P6,000 Services performed by Dept. A Services performed by Dept. B 40% 40% 20% 20% 70% 10% 1) If the company is using the direct method to allocate service department costs, the service department cost allocated to Department Y is: 2) Using the information in number 1, what is the total cost for Department X? 3) If the company is using the step-down to allocate service department costs and Department A costs are allocated first, the service department cost allocated to Department Y is? 4) Using the information in number 3, the total cost for Department X is? 5) If the reciprocal method is used, the service department cos allocated to department Y is?
Accounting Alta Ltd. is manufacturing three products : A, B and C. The costs of manufacture are as follows Fixed costs of Alta Ltd. is $15,000. Calculate profit and do a CVP Analysis for Alta Ltd. Products Raw Material Labour Overheads Sales A 16,000 14,000 10,000 60,000 B 20,000 17,000 12,000 70,000 C 26,000 18,000 14,000 80,000
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MANAGEMENT ACCOUNTING ANSWER QUESTION 1 AND 2 ONLY The following information is extracted from Kobena Company’s records for Product A, Period 1; Units produced 18,000 units Units sold (RM27 per unit) 17,200 units Budgeted units 18,000 units Variable production cost per unit RM17 Fixed cost: Fixed production overheads Fixed administration costs RM45,000 RM13,000 There were no opening inventories at the beginning of the period. By referring to the information given for Product A, you are required to: i) Calculate the predetermined overheads absorption rate per unit based on unit of production. ii) Calculate total production cost per unit. iii) The value of closing inventory in Ringgit Malaysia (RM). iv) Prepare Absorption Costing Statement of Profit and Loss for Period 1.
Problem 1-42 (Algo) Cost Data for Managerial Purposes (LO 1-3) Durham Parts (DP) makes a variety of products. It is organized in two divisions, Eastern and Western. The managers for each division are paid, in part, based on the financial performance of their divisions. The Western Division normally sells to outside customers but, on occasion, also sells to the Eastern Division. When it does, corporate policy states that the price must be cost plus 25 percent to ensure a "fair" return to the selling division. Western received an order from Eastern for 1,200 units. Western's planned output for the year had been 4,800 units before Eastern's order. Western's capacity is 6,000 units per year. The costs for producing those 4,800 units follow. Materials Direct labor Other costs varying with output Fixed costs (do not vary with output) Totals Total $ 374,400 182,400 144,000 288,000 $ 988,800 Per Unit $ 78 38 30 68 $ 206 Required: a. If you are the manager of the Western Division, what unit…
Required information [The following information applies to the questions displayed below] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $6.00 $ 3.50 1.50 $4.08 $ 3.98 $ 2.00 $1.00 $ $ 8.50 9. If 8,000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production? Total fixed manufacturing cost