4 the gant company produces three items in its manufacturing plant the plant has a t 4313375

4 the gant company produces three items in its manufacturing plant the plant has a t 4313375

4.The Gant Company produces three items in its manufacturing plant.  The plant has a total capacity of 9,600 minutes per month for production.  The following information is provided for the products:

Products

X

Y

Z

Direct material

$16

$10

$14

Direct labor (all variable)

15

14

15

Variable overhead

2

3

4

Fixed overhead

20

23

30

Unit cost

$53

$50

$63

Minutes required per unit

5

4

6

Selling price per unit

$70

$65

$80

Variable selling expense per unit

$5

$4

$2

Monthly demand in units

2,200

1,000

800

Required:

a.How many minutes would be required to meet the demand for all three products?

b.How many units of each product should Gant product to maximize profit?  Show your calculations.

5.Hermitage Farms produces two products, X and Y, in a joint process.  The products may each be sold at the split-off point or processed further.  The selling price $1.10 for X and $0.80 for Y if the products are sold without further processing.  Data for the two products, if processed further, is presented below:

Product X

Product Y

Total

Sales volume

28,000 units

16,000 units

Revenues

$42,000

$18,400

$60,400

Traceable processing cost

12,000

5,000

17,000

Segment Margin

$30,000

$13,400

$43,400

Joint costs

$35,000

Profit before Taxes

$6,000

Required:  What is the monetary advantage (disadvantage) of further processing the products?  Show calculations.

6.Creative Lawn Ornaments sells three categories of lawn structures:  Fountains, Bird and Butterfly Houses, and Obelisks.  For the current year, Creative reported the following results:

Fountains

Houses

Obelisks

Total

Revenue

$175,000

$145,000

$95,000

$415,000

Variable costs

      85,000

     43,000

   45,000

  173,000

Contribution margin

$  90,000

$102,000

$50,000

$242,000

Traceable fixed costs

30,000

33,000

30,000

93,000

Common fixed costs

      35,000

     35,000

  35,000

  105,000

Profit

$   25,000

$   34,000

($15,000)

$  44,000

Creative’s owner is pleased with the overall profit, but is concerned about the loss on the Obelisks line and is considering eliminating it.  The owner believes that if the Obelisk sales are discontinued he will be able to display more Fountains and increase the revenues by 5% without increasing any fixed costs.  If the Obelisk line is discontinued, all of its traceable fixed costs will be avoided, but its common fixed costs will be allocated to the Fountains.

Required:

Evaluate whether Creative Lawn Ornaments should discontinue its line of Obelisk structures.  Show all calculations.

.

 

"Get 15% discount on your first 3 orders with us"
Use the following coupon
"FIRST15"

Order Now

Related Posts