Question

In: Accounting

Sheridan's Wind Toys manufactures decorative kites, banners, and windsocks. During the month of January, Sheridan received...

Sheridan's Wind Toys manufactures decorative kites, banners, and windsocks. During the month of January, Sheridan received orders for 5,000 Valentine’s Day banners and 1,200 Easter kites. Because several sewing machines are in the shop for repairs, Sheridan has only 1,100 sewing machine hours available for production of these orders. Each Valentine’s Day banner sells for $12. The banners take one hour to sew and have a total variable cost of $10 per banner. The Easter kites sell for $15. They take 15 minutes to sew and have a total variable cost of $14.

(a)

With only 1,100 sewing machine hours available, how many units should Sheridan produce for the below items?

Kites
Banners



Based on your calculations above, which products should Wendy prioritize for production in January?

Kites or Banners?

Solutions

Expert Solution

Statement showing Ranking of products on basis of contribution per machine hour

Banners Kites
Selling price $12 $15
Variable cost $10 $14
Contribution per unit $2 $1
Machine hours required to produce 1 unit 1 hour .25 hours
Contribution per hour. (Contribution per unit/Hours required) 2 4
Ranking II I
Units produced 800 units 1,200 units

Here machine hours is a constraint so we should calculate contribution of each product on basis of machine hour

Orders received for kite= 1,200 unit

Hours to produce 1200 kites= Order received *Hours required to produce 1 kite

= 1,200*.25=300 hours

Hours left=1,100- 300= 800 hours

Banners prodcued= Hours available*Hours require to sew 1 banner

=800*1

Banners produced=800 banners

b)

Since contribution per hour of kite is higher we should priortize production of kite in month of january, so make 1200 units of kite and then in remaining hours produce Banners.

Hope it helps!!!

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Presented below is information for Sheridan Company for the month of January 2017. Cost of goods...
Presented below is information for Sheridan Company for the month of January 2017. Cost of goods sold $204,300 Rent expense $32,300 Freight-out 6,100 Sales discounts 8,900 Insurance expense 13,800 Sales returns and allowances 17,500 Salaries and wages expense 62,000 Sales revenue 397,500 Income tax expense 5,500 Other comprehensive income (net of $400 tax) 2,000
During an average month, Space toys plans to sell 125 units each of its standard and...
During an average month, Space toys plans to sell 125 units each of its standard and its deluxe product. Budgeted contribution margins are $175 and $250 per unit, respectively. Of the total actual sales of 260 units, 132 units were of the standard product. Determine the sales mix variance. Enter favorable variances as a positive value and unfavorable variances as a negative number. Do not enter $ sign or commas.
During the month of January, the following costs were incurred:
  During the month of January, the following costs were incurred: 2010 Jan 8     Purchased Materials for cash, $150,000 Jan 10    Requisition for Direct Materials that were put into production, $100,000 Jan 20    Requisitioned for Indirect Materials that were put into production, $4,000. Jan 23    Direct Labor cost incurred during the period, $60,000 when the labor rate per hour was $5. Jan 25    Indirect labor cost incurred during the month of January is $6,000. Jan 28    Paid factory supervisor’s salaries...
The gross earnings of the factory workers for Larkin Company during the month of January are...
The gross earnings of the factory workers for Larkin Company during the month of January are $72,000. The employer’s payroll taxes for the factory payroll are $7,600. The fringe benefits to be paid by the employer on this payroll are $5,400. Of the total accumulated cost of factory labor, 83% is related to direct labor and 17% is attributable to indirect labor. (a) Prepare the entry to record the factory labor costs for the month of January. (b) Prepare the...
Churros Ltd received its bank statement for the month of January 2020 showing a credit balance...
Churros Ltd received its bank statement for the month of January 2020 showing a credit balance of $4,188.30 as at 31 January 2020. The cash balance on the company’s books at 1 January 2020 was $176.00 (debit). The progressive totals of the Cash Receipts Journal and the Cash Payments Journal before considering items 1 to 5 below were $21,475.40 and $17,622.10 respectively. The following reconciling items were identified: (1) Un-presented cheques amounted to $501.25. (2) Debits included in the bank...
Jane industries manufactures plastic toys. the company uses the FIFO processing costing system. During October, Janes...
Jane industries manufactures plastic toys. the company uses the FIFO processing costing system. During October, Janes Fabrication department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the distribution department. The company ended the month with 1500 models in ending inventory. There were 2500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. Beginning...
During the month of January, Sundown Corporation had sales of $580,000 and a cost of goods...
During the month of January, Sundown Corporation had sales of $580,000 and a cost of goods available for sale of $1,160,000. The company consistently earns a gross profit rate of 49%. Using the gross profit method, the estimated inventory at January 31 amounts to: $295,800. $864,200. $284,200. $875,800.
Following are transactions of Gone Tanners, Inc., a new company, during the month of January:
Following are transactions of Gone Tanners, Inc., a new company, during the month of January: Issued 10,000 shares of common stock for $15,000 cash. Purchased land for $12,000, signing a note payable for the full amount. Purchased office equipment for $1,200 cash. Received cash of $14,000 for services provided to customers during the month. Purchased $300 of office supplies on account. Paid employees $10,000 for their first month's salaries. How many of these transactions increased Gone's liabilities?
Witt Corporation received its charter during January of this year. The charter authorized the following stock:...
Witt Corporation received its charter during January of this year. The charter authorized the following stock: Preferred stock: 10 percent, $13 par value, 22,400 shares authorized Common stock: $11 par value, 50,900 shares authorized During the year, the following transactions occurred in the order given: a. Issued a total of 39,000 shares of the common stock at $15 cash per share. b. Sold 6,800 shares of the preferred stock at $19 cash per share. c. Sold 4,100 shares of the...
Witt Corporation received its charter during January of this year. The charter authorized the following stock:...
Witt Corporation received its charter during January of this year. The charter authorized the following stock: Preferred stock: 10 percent, $11 par value, 22,700 shares authorized Common stock: $9 par value, 50,500 shares authorized During the year, the following transactions occurred in the order given: a. Issued a total of 39,800 shares of the common stock at $13 cash per share. b. Sold 7,500 shares of the preferred stock at $17 cash per share. c. Sold 3,300 shares of the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT