# 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.

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