Question
In: Accounting
Chastain Corporation produces three products, with costs and selling prices as follows: Product A Product B...
Chastain Corporation produces three products, with costs and selling prices as follows:
|
Product A |
Product B |
Product C |
|||||||||||||||||
|
Selling price per unit |
$ |
30 |
100 |
% |
$ |
20 |
100 |
% |
$ |
15 |
100 |
% |
|||||||
|
Variable costs per unit |
18 |
60 |
% |
15 |
75 |
% |
6 |
40 |
% |
||||||||||
|
Contribution margin per unit |
$ |
12 |
40 |
% |
$ |
5 |
25 |
% |
$ |
9 |
60 |
% |
|||||||
A particular machine is the bottleneck. On that machine, 3 machine hours are required to produce each unit of Product A, 1 hour is required to produce each unit of Product B, and 2 hours are required to produce each unit of Product C.
Required:
- Prepare an analysis of the contribution margin per unit of the constrained resource.
- b. Rank the products from the most profitable to the least profitable use of the constrained resource
Solutions
Expert Solution
Correct Answer:
|
Product |
||||
|
A |
B |
C |
||
|
A |
Sales price per unit |
$ 30.00 |
$ 20.00 |
$ 15.00 |
|
B |
Variable cost per unit |
$ 18.00 |
$ 15.00 |
$ 6.00 |
|
C=A-B |
Contribution margin per unit |
$ 12.00 |
$ 5.00 |
$ 9.00 |
|
D = 1/no. of machines produced in 1 hour |
Machine hour per unit |
0.33 |
1.00 |
0.50 |
|
E =C/D |
Contribution margin per machine hour |
$ 36.00 |
$ 5.00 |
$ 18.00 |
|
Ranking |
I |
III |
II |
|
End of Answer.
Thanks
ekkarill92 answered 1 year agoRelated Solutions
Information regarding the selling prices and unit costs of three products is as follows: Product F...
Information regarding the selling prices and unit costs of three
products is as follows:
Product
F
G
H
Selling price
$
70
$
50
$
80
Variable costs
$
30
$
20
$
35
Fixed costs
$
10
$
7
$
7
Machine time (minutes)
10
5
5
Fixed costs are applied to the products on the basis of direct
labor hours.
Due to the amount of machine time available, the company cannot
produce all the units demanded. The only...
Garson, Inc. produces three products. Data concerning the selling prices and unit costs of the three...
Garson, Inc. produces three products. Data concerning the
selling prices and unit costs of the three products appear
below:
Product
F
G
H
Selling price
$
60
$
40
$
70
Variable costs
$
25
$
15
$
30
Fixed costs
$
50
$
5
$
47
Milling machine time (minutes)
10
5
5
Fixed costs are applied to the products on the basis of direct
labor hours.
Demand for the three products exceeds the company's productive
capacity. The milling...
Garson, Inc. produces three products. Data concerning the selling prices and unit costs of the three...
Garson, Inc. produces three products. Data concerning the
selling prices and unit costs of the three products appear
below:
Product
F
G
H
Selling price
$
75
$
55
$
85
Variable costs
$
50
$
40
$
55
Fixed costs
$
45
$
8
$
42
Milling machine time (minutes)
10
5
5
Fixed costs are applied to the products on the basis of direct
labor hours.
Demand for the three products exceeds the company's productive
capacity. The milling...
The Grand Company produces three products with the followings costs & selling price: \ Product Name...
The Grand Company produces three products with the followings
costs & selling price: \
Product Name Large Medium Small Selling
Price per unit $15 20 20
Variable cost per unit 8 10 12
Machine Hours per unit 3.5 2 2.5
Grand has a limit of 20,000 machine hours available per month.
The company has a monthly fixed cost $50,000. If there is virtually
unlimited demande for each of the products, what is the maximum
monthly profit? If the demand for...
2 – Portofino Corporation produces three products in a joint process: Product A, Product B and...
2 – Portofino Corporation produces three
products in a joint process: Product A, Product B and Product C.
The total joint manufacturing costs were 100,000$. Information
regarding the products appears below:
Product A
Product B
Product C
Units Produced
20,000
25,000
10,000
Sales Value at Split-off
$150,000
$50,000
$20,000
Additional costs if Processed further
$10,000
$30,000
$5,000
Sales Value if Processed Further
$170,000
$90,000
$28,000
Required:
(a) Allocate the joint costs using the relative sales value at
split-off method.
(b)...
Wasp company produces three products with the following information: Product A B C Selling price per...
Wasp company produces three products with the following
information:
Product
A
B
C
Selling price per unit
$17
$19
$26
Variable cost per unit
$8
$10
$12
Machine-hours per unit (MH/unit)
2
3
4
The company has a limit of 13,800 machine-hours available per
month and a monthly fixed cost of $4,000. The demand for each of
the products is 2,500 units per month.
The company’s goal is to maximize its profitability.
Suppose the company can rent a machine that...
Wasp company produces three products with the following information: Product A B C Selling price per...
Wasp company produces three products with the following
information:
Product
A
B
C
Selling price per unit
$17
$19
$26
Variable cost per unit
$8
$10
$12
Machine-hours per unit (MH/unit)
2
3
4
The company has a limit of 13,800 machine-hours available per
month and a monthly fixed cost of $7,500. The demand for each of
the products is 2,500 units per month.
The company’s goal is to maximize its profitability.
Suppose the company can rent a machine that...
A company makes two products, the variable costs are as follows; Product A Product B £...
A company makes two products, the variable costs are as
follows;
Product A Product B
£ £
Direct materials 1 3
Direct labour (£6 per hour) 6 3
Variable overhead 1 1
8 7
The sale price of A is £14 and B is £11. During the month of
July the availability of Direct Labour is limited to 5000 hours due
to staff taking holidays. Sales demand is expected to be 3000 units
of A and 5000 units of B....
Lindstrom Company produces two fountain pen models. Information about its products follows: Product A Product B...
Lindstrom Company produces two fountain pen models. Information
about its products follows:
Product A
Product B
Sales revenue
$
120,000
$
125,000
Less: Variable costs
60,000
66,000
Contribution margin
$
60,000
$
59,000
Total units sold
7,000
7,000
Lindstrom’s fixed costs total $84,500.
Required:
1. Determine Lindstrom’s weighted-average unit
contribution margin and weighted-average contribution margin ratio.
(Round your weighted-average CM to 2 decimal places and
your CM ratio to 1 decimal place (i.e. .123 should be entered as
12.3%)).
2....
Ibrahim Compagny produces three products A, B and C. During the year, the joint costs of...
Ibrahim Compagny produces three products A, B and C. During the
year, the joint costs of processing the three products were
$480,000. Production and sales value information were as
follows:
Sales Value
Product
Units at
Split-Off Separable
Costs Selling Price
A
500,000 $13 per
unit $6.00 per
unit $40 per unit
B
300,000 $12 per
unit $4.00 per
unit $37 per unit
C
200,000 $8 per
unit $3.00 per
unit $28 per unit
Allocate the joint costs using the...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- What are the basic elements of a valid contract? What are the elements of an offer?...
- Jean-Jacques Rousseau and John Locke both seem to have an idea as to what best impacts...
- 1. Provide an overview of the systems design phase. 2. Explain Apple’s view of user interface...
- Please consider the following, and offer three (3) responses between one (1) and three (3) sentences...
- Assume you are a new employee at Payroll Inc. a company which process payroll, advises small...
- Write a program that prints the count of all prime numbers between A and B (inclusive),...
- Write an HTML file for a web page that contains the items below. Use an internal...
ADVERTISEMENT