Question
In: Accounting
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs:
| Products | |||||||||||||||
| A | B | C | D | ||||||||||||
| Direct materials | $ | 14.85 | $ | 10.75 | $ | 11.55 | $ | 11.15 | |||||||
| Direct labor | 19.95 | 27.95 | 34.15 | 40.95 | |||||||||||
| Variable manufacturing overhead | 4.85 | 3.25 | 3.15 | 3.75 | |||||||||||
| Fixed manufacturing overhead | 27.05 | 35.35 | 27.15 | 37.75 | |||||||||||
| Unit product cost | $ | 66.70 | $ | 77.30 | $ | 76.00 | $ | 93.60 | |||||||
Additional data concerning these products are listed
below.
| Products | |||||||||||||||
| A | B | C | D | ||||||||||||
| Grinding minutes per unit | 3.80 | 5.30 | 4.30 | 3.40 | |||||||||||
| Selling price per unit | $ | 76.65 | $ | 94.05 | $ | 87.95 | $ | 104.75 | |||||||
| Variable selling cost per unit | $ | 2.75 | $ | 1.75 | $ | 3.85 | $ | 2.15 | |||||||
| Monthly demand in units | 4,220 | 4,220 | 3,220 | 2,220 | |||||||||||
The grinding machines are the constraint in the production
facility. A total of 54,700 minutes is available per month on these
machines.
Direct labor is a variable cost in this company.
Which product makes the MOST profitable use of the grinding
machines?
Solutions
Expert Solution
| Products | ||||
| A | B | C | D | |
| Grinding minutes per unit (a) | 3.80 | 5.30 | 4.30 | 3.40 |
| Selling price per unit (b) | $76.65 | $94.05 | $87.95 | $104.75 |
| Sales Revenue (a * b) | $291.27 | $498.47 | $378.19 | $356.15 |
| Less: Variable Costs (see note) | ($161.12) | ($231.61) | ($226.61) | ($197.20) |
| Contribution Margin | $130.15 | $266.86 | $151.58 | $158.95 |
| Less: Fixed Costs (see note) | ($102.79) | ($187.36) | ($116.75) | ($128.35) |
| Operating Income | $27.36 | $79.49 | $34.83 | $30.60 |
| Therefore, Product B is more profitable because it has highest operating income based on the use of grinding machines. | ||||
| Working notes: | A | B | C | D |
| Direct materials | $14.85 | $10.75 | $11.55 | $11.15 |
| Direct labor | $19.95 | $27.95 | $34.15 | $40.95 |
| Variable manufacturing overheads | $4.85 | $3.25 | $3.15 | $3.75 |
| Variable selling cost per unit | $2.75 | $1.75 | $3.85 | $2.15 |
| Variable cost per unit (a) | $42.40 | $43.70 | $52.70 | $58.00 |
| Grinding minutes per unit (b) | 3.80 | 5.30 | 4.30 | 3.40 |
| Variable costs (a*b) | $161.12 | $231.61 | $226.61 | $197.20 |
| Fixed manufacturing overheads (a) | $27.05 | $35.35 | $27.15 | $37.75 |
| Grinding minutes per unit (b) | 3.80 | 5.30 | 4.30 | 3.40 |
| Total Fixed Expenses (a*b) | $102.79 | $187.36 | $116.75 | $128.35 |
ekkarill92 answered 3 years agoRelated Solutions
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs: Products A B C D
Direct materials $ 14.90 $ 10.80 $ 11.60 $ 11.20 Direct labor 20.00
28.00 34.20 41.00 Variable manufacturing overhead 4.90 3.30 3.20
3.80 Fixed manufacturing overhead 27.10 35.40 27.20 37.80 Unit
product cost $ 66.90 $ 77.50 $ 76.20 $ 93.80 Additional data
concerning these products are listed below. Products A B C D
Grinding minutes per unit...
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.30
$
10.20
$
11.00
$
10.60
Direct labor
19.40
27.40
33.60
40.40
Variable manufacturing overhead
4.30
2.70
2.60
3.20
Fixed manufacturing overhead
26.50
34.80
26.60
37.20
Unit product cost
$
64.50
$
75.10
$
73.80
$
91.40
Additional data concerning these products are listed
below.
Products
A
B
C
D
Grinding minutes per unit...
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.45
$
10.35
$
11.15
$
10.75
Direct labor
19.55
27.55
33.75
40.55
Variable manufacturing overhead
4.45
2.85
2.75
3.35
Fixed manufacturing overhead
26.65
34.95
26.75
37.35
Unit product cost
$
65.10
$
75.70
$
74.40
$
92.00
Additional data concerning these products are listed
below.
Products
A
B
C
D
Grinding minutes per unit...
Master Company makes four products in a single facility. These products have the following unit product...
Master Company makes four products in a single facility. These
products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
19.90
$
15.20
$
20.80
$
23.20
Direct labor
12.20
8.70
10.50
7.40
Variable manufacturing overhead
$
1.60
$
2.10
$
2.00
$
2.10
Fixed manufacturing overhead
10.80
11.90
8.80
10.70
Unit product cost
44.50
37.90
42.10
43.40
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
16.30
$
20.20
$
13.20
$
15.90
Direct labor
18.30
21.70
16.10
10.10
Variable manufacturing overhead
5.10
6.30
8.80
5.80
Fixed manufacturing overhead
28.20
15.10
15.20
17.20
Unit product cost
$
67.90
$
63.30
$
53.30
$
49.00
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
13.10
$
9.00
$
9.80
$
9.40
Direct labor
18.20
26.20
32.40
39.20
Variable manufacturing overhead
3.10
1.50
1.40
2.00
Fixed manufacturing overhead
25.30
33.60
25.40
36.00
Unit product cost
59.70
70.30
69.00
86.60
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit
2.60
3.20
3.10
2.20...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
19.90
$
15.20
$
20.80
$
23.20
Direct labor
12.20
8.70
10.50
7.40
Variable manufacturing overhead
1.60
2.10
2.00
2.10
Fixed manufacturing overhead
10.80
11.90
8.80
10.70
Unit product cost
$
44.50
$
37.90
$
42.10
$
43.40
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.80
$
10.70
$
11.50
$
11.10
Direct labor
19.90
27.90
34.10
40.90
Variable manufacturing
overhead
4.80
3.20
3.10
3.70
Fixed manufacturing
overhead
27.00
35.30
27.10
37.70
Unit product cost
66.50
77.10
75.80
93.40
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit
4.30
5.80
4.80
3.90...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.60
$
10.50
$
11.30
$
10.90
Direct labor
19.70
27.70
33.90
40.70
Variable manufacturing overhead
4.60
3.00
2.90
3.50
Fixed manufacturing overhead
26.80
35.10
26.90
37.50
Unit product cost
65.70
76.30
75.00
92.60
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit
4.10
5.60
4.60
3.70...
Brown Corporation makes four products in a single facility. These products have the following unit product...
Brown Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct
materials
$13.10
$9.00
$9.80
$9.40
Direct labor
18.20
26.20
32.40
39.20
Variable
manufacturing overhead
3.10
1.50
1.40
2.00
Fixed manufacturing
overhead
25.30
33.60
25.40
36.00
Unit product
cost
$59.70
$70.30
$69.00
$86.60
Additional data concerning these
products are listed below.
Products
A
B
C
D
Grinding minutes per
unit
2.60
3.20
3.10
2.20
Selling price per
unit...
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