Question

In: Accounting

Selling price of ZylexB per gallon $         17.00 Selling price of ZylexA per gallon $         11.00...

Selling price of ZylexB per gallon $         17.00
Selling price of ZylexA per gallon $         11.00
Minutes to manufacture a gallon of ZylexA                  25
Additional minutes to manufacture a gallon of ZylexB                  10
Cost per gallon of resources for manufacturing:
ZylexA Additional Cost - ZylexB
Material $2.00 $1.75
Labor 2.50 0.50
Variable overhead 2.25 1.10
Both products have been successful and demand for both products is strong and beyond the company's capacity. Since it takes additional time to manufacture ZylexB, the vice president of production is trying to determine whether ZylexB should be produced.
Required
Which product makes the largest contribution to company profit, given a capacity constraint measured in terms of production time?
ZylexA
Incremental revenue of Zylex B
Incremental costs:
Incremental profit of ZylexB

Solutions

Expert Solution

ekkarill92 answered 11 months ago
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