Question
In: Accounting
Happy Pharmaceuticals produces three products using one machine. The machine has a total capacity of 200 machine hours.
Happy Pharmaceuticals produces three products using one machine. The machine has a total capacity of 200 machine hours. Product A sells for $13 per unit, has a variable cost per unit of $11, and each unit takes 1 machine hour to produce. Product A’s market demand is 150 units per week. Product B sells for $25 per unit, has a variable cost per unit of $15, and each unit takes 2 machine hours to produce. Product B’s market demand is 50 units per week. Product C sells for $3 per unit, has a variable cost per unit of $1, and each unit takes 0.8 machine hour to produce. Product C’s market demand is 200 units per week.
a) How many units of product C should the firm produce?
b) What is the maximum contribution margin the firm can achieve?
c) What is the maximum the firm should pay to increase its capacity by 200 machine hours?
Solutions
Expert Solution
a)The firm should produce that product which provide highest contribution per machine hour.
| Product | Contribution | MH per unit | contribution per Mh | MHs used |
| A | $13-11=2 | 1 | 2 | |
| B | 25-15=10 | 2 | 5 | 50 units *2=100 MHs |
| C | 3-1=2 | 0.8 | 2.5 | 100 MHs /0.8=125 units |
So, firm will produce 125 units per week of Product C.
b) The maximum contribution the firm can achieve = 50*10 + 125*2=$750
c) Maximum the firm should pay to increase its capacity by 200 MHs
= 75*2 (ie. 60 MHs) +140*2 (ie. 140 MHs) = $430
ekkarill92 answered 2 years agoRelated Solutions
ABC Company produces three products: A, B, and C. The company only has 300 labor hours...
ABC Company produces three products: A, B, and C. The company
only has 300 labor hours per week to produce these 3 products.
Product information is as follows:
A
B
C
Unit selling
price
140
75
240
Unit variable Costs
100
50
180
Unit contribution margin 40
25
60
Labor hours per unit 5
4
6
Maximum demand in units per week 15 20 30
What is the optimal product mix(how many A, B, and C should...
ABC Company produces three products: A, B, and C. The company only has 300 labor hours...
ABC Company produces three products: A, B, and C.
The
company only has
300
labor
hours per week to produce these 3 products
Product
information is as follows:
A
B
C
Unit
selling price
140
75
240
Unit
variable costs
100
50
180
Unit contribution margin
40
25
60
Labor
hours per unit
5
4
6
Maximum demand in units per week
15
20
30
Required:
What is
the optimal product mix(how many A, B, and C should be produced)...
A machine with a rotating shaft has a total weight of 200 lbs, and is supported...
A
machine with a rotating shaft has a total weight of 200 lbs, and is
supported by springs. The damping constant for the system is found
to be 3 lb.sec/in. The resonant speed is determined exprimentally
to be 1200 rpm, and the corresponding amplitude of the main mass of
the machine is 0.50 inches. (a) Determine the amplitude for a speed
of 2400 rpm. (b) Determine the fixed value which amplitude will
eventually approach at high speed. (c) Determine the...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity
is limited to 48,000 machine hours per year. The following information
is available for planning purposes:
Product A Product B Product C
demand for next year ............. 24,000 units 25,000 units 12,000 units
selling price per unit ........... $80 $120 $160
direct material cost per unit .... $24 $ 21 $ 38
direct labor cost per unit ....... $18 $ 50 $ 38
variable overhead cost per unit...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity
is limited to 48,000 machine hours per year. The following information
is available for planning purposes:
Product A Product B Product C
demand for next year ............. 24,000 units 25,000 units 12,000 units
selling price per unit ........... $80 $120 $160
direct material cost per unit .... $24 $ 21 $ 38
direct labor cost per unit ....... $18 $ 50 $ 38
variable overhead cost per unit...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 200,000...
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is
limited to 200,000 machine hours per year. The following information is
available for planning purposes:
Product A Product B Product C
demand for next year in units .... 100,000 200,000 150,000
selling price per unit ........... $18 $28 $24
variable costs per unit .......... $15 $20 $22
It is known that it takes 0.40 machine hours to produce one unit of Product A;
0.70 machine hours to...
Center Company currently produces three products from a joint process. The joint process has total costs...
Center Company currently produces three products from a joint
process. The joint process has total costs of $511,000 per month.
All three products, A, B & C, are immediately saleable as they
come out of the joint process. Alternatively, any of the products
could continue on with additional processing and be sold as a more
complete product. The following information is available: Units
Immediate Sales Price Later Sales Price Unit Cost of Further
Processing A 4,500 $ 18 $ 20...
Incline Electronics produces three different products in a plant that is open 40 hours per week....
Incline Electronics produces three different products in a plant
that is open 40 hours per week. Each product requires the following
processing times (in hours) on each of three machines.
Each machine must be run by one of 19 cross-trained workers who
are each available 35 hours per week. The plant has 10 type 1
machines available, 6 type 2 machines available, and 8 type 3
machines available. Products 1, 2, and 3 contribute $90, $120, and
$150, respectively, in...
Hanson Corp. produces three products, and is currently facing a labor shortage – only 3,180 hours...
Hanson Corp. produces
three products, and is currently facing a labor shortage – only
3,180 hours are available this month. The selling price, costs, and
labor requirements of the three products are as follows:
Product A
Product B
Product C
Selling
price
$
98.00
$
70.00
$
88.00
Variable cost
per unit
$
57.00
$
29.00
$
48.00
Direct labor
hours per unit
3.4
4.8
3.8
a. What is the contribution margin per unit for
each product?
A-
B-
C-...
Hanson Corp. produces three products, and is currently facing a labor shortage – only 4,200 hours...
Hanson Corp. produces
three products, and is currently facing a labor shortage – only
4,200 hours are available this month. The selling price, costs,
labor requirements, and demand of the three products are as
follows:
Product A
Product B
Product C
Selling
price
$
59.00
$
38.00
$
51.00
Variable cost
per unit
$
53.00
$
30.00
$
47.00
Direct labor
hours per unit
1.5
2.7
2.0
Demand
1,600
1,400
1,600
a. In
what order should Hanson prioritize production of...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Merger Analysis TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia...
- Journal Entries and Trial Balance Elite Realty acts as an agent in buying, selling, renting, and...
- In racket Assume that the elements of a list are indexed starting with 1. Write a...
- Describe System Development Life Cycle (SDLC) and how it is used.
- What symbolism do you find in the play,Oedipus?
- • Using the Scanner class to obtain input from the user. • Using printf to output...
- In each of the following situations, develop a tentative plan for the client. List the various...
ADVERTISEMENT