BUSINESS COLLEGE

A company has three products possible products that it can produce in a machine intensive production process. Capacity is constrained by the number of hours the machines can run during a period and the products are so popular that all units produced will be sold. Here is additional information: Product A Product B Product C
Contribution per unit $20 $30 $40
Machine hours per unit 2.5 3.25 4.5
Which of the following would be an accurate conclusion based on these facts?

A. Since Product C has the greatest contribution margin per unit and therefore emphasizing its production and sales will lead to the highest operating income in the short-run

B. Since A takes less time to produce, maximization of operating income will occur by emphasizing production and sales of A.

C. A balanced mix of 1/3 A, 1/3 B, and 1/3 C should be the goal when maximizing operating income in the short-run.

D. Product B should be emphasized if the goal is to maximize contribution margin.

Answers

Answer 1

Answer:

Answer:

Explanation:

A B C

Contribution per unit 20 30 40

Machine hours per unit 2.5 3.25 4.5

Contribution per hour 8 9.23 8.89

Product B has the highest contribution per hour .

It is stated that the capacity is constrained by the number of hours the machine can run during a period . and all products produce will be sold. This has made the machine hour the determinant factor in the situation.

Therefore product B should be emphasized if the goal is to maximize contribution margin.

Related Questions

Karen Moore is a new employee with Cars R Us. One of her first responsibilities as the new HR Director is to create an incentive program for the organization. Cars R Us specializes in selling and leasing mid-priced vehicles across the United States. The organization has locations in each state in the four main regions of the United States. Recently, however, employee performance has been declining along with the unfortunate decline of car sales.Before Ms. Moore creates an incentive program, she knows she will need to identify what is best practice for the industry, what the organization has done to reward the employees in the past as well as know what the financial constraints are to the new incentive program. Once completed, she will be able to implement a well-constructed incentive program established with the goals of increasing employee job satisfaction and performance as well as improve the companyâs financial position.One of the first items on Ms. Mooreâs agenda is to identify the preferred method of earning rewards. In reviewing the results of a recent survey completed by more than 60 percent of the employees, she learns that the employees are competitive and are interested in group incentives programs as well as individual rewards.Ms. Moore recommends Cars R Us include a _______ system that will provide all employees to receive a portion of the increase in productivity and effectiveness.A. gainsharingB. costC. equityD. reductionE. timesharing
Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25. Inventory is salvaged for $5. What is its maximum profit? $12,500 $8000 $5000 $7500
Which of the following is an example of the free-rider problem? a. Both Zoe and Zach receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care. b. Alfred receives a free lunch from the local "Meals on Wheels" program because of his low monthly income. Yet his next door neighbor, Alice, is not eligible for the free lunch. c. Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking. d. Sam purchases a burger at a fast food restaurant and gets a second burger free because the restaurant is having a buy one, get one free sale.
Ten years ago, Hailey invested $2,100 and locked in an annual interest rate of 8 percent for 30 years (ending 20 years from now). Aidan can make a 20-year investment today and lock in an interest rate of 9 percent. How much money should he invest now in order to have the same amount of money in 20 years as Hailey? (
Saturn Systems Inc., which is headquartered in the United States, has its production plant located in a less-developed country where working conditions are poor. For example, employees work 15-hour shifts, are exposed to toxic chemicals, and are forced to work overtime. What type of behavior is Saturn Systems Inc. exhibiting?a. unethicalb. uneconomicalc. faird. courageouse. just

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. The energy-efficient model sells for $1,700 and will save you $45 in electricity costs at the end of each of the next five years. The standard model has features similar to the energy-efficient model but provides no future saving in electricity costs. It is priced at only $1,500

Answers

Answer:

It is better to buy an energy efficient model for $ 1700.

Explanation:

It is better to buy an energy efficient model for $ 1700 because at the end of five years its costs will be less than $ 1500. It saves $ 45 each year and that would save $ 45*5 = $ 225 at the end of five years. That would result in low costs as $ 1700- $ 225= $ 1475 which is less than $ 1500.

Buying $1500 is not a smart choice because then it would add up to expenses . Expenses for $ 45 each year would result in $225 in five years that would add up to be $ 1725 which is higher than $ 1700.

Accounts receivable in an existing business:A) are rarely worth their face value.

B) unlike inventory, are often worth their face value.

C) appreciate over time due to interest and penalties.

D) are not a significant consideration when buying anexisting business

Answers

Answer:

The correct answer is letter "A": are rarely worth their face value.

Explanation:

Accounts receivables are notes issued to customers after selling them a product or rendering services on credit. The repayment term may vary from 30, 60 or 90 days. If an account receivable is not paid after that period it could be considered as an uncollectible account which implies the company will incur losses.

Accounts receivable are hardly ever accepted at face value (real value of the moment of the purchase) because companies add the interest rate that is to be charged for the sale on the account.

Carlson Fashions uses standard costs for Its manufacturing division. From the following data, calculate the fixed overhead volume variance.-Actual fixed overhead $40,000-Budgeted fixed overhead $21,000-Standard overhead allocation rate $6-Standard direct labor hours per unit 4 DLHr-Actual output 2,100

Answers

Answer:

Overhead volume balance= $29,400 unfavorable

Explanation:

Giving the following information:

From the following data, calculate the fixed overhead volume variance.

-Actual fixed overhead $40,000

-Budgeted fixed overhead $21,000

-Standard overhead allocation rate $6

-Standard direct labor hours per unit 4 DLHr

-Actual output 2,100.

Overhead volume variance= budgeted fixed overhead - fixed overhead applied= 21,000 - 50,400= 29,400 unfavorable

A budget that spends more money than the revenue coming in is known as a _______ budget. A. surplus B. federal C. balanced D. deficit

Answers

Answer:

D. deficit

Explanation:

A budget surplus is income left over during a budget period after all budget expenses have been paid.

A federal budget is the government's estimate of revenue and spending for each fiscal year.

A balanced budget is a budget in which revenues are equal to expenditures.

Answer:

D. deficit

Explanation:

I took a quiz!

Here is the income statement for Skysong, Inc. SKYSONG, INC. Income Statement For the Year Ended December 31, 2022
Sales revenue $404,100
Cost of goods sold 234,000
Gross profit 170,100
Expenses (including $16,700 interest and $26,400 income taxes) 83,500
Net income $ 86,600
Additional information:
1. Common stock outstanding January 1, 2022, was 24,700 shares, and 37,100 shares were outstanding at December 31, 2022.
2. The market price of Skysong stock was $14 in 2022.
3. Cash dividends of $22,900 were paid, $4,900 of which were to preferred stockholders.
Compute the following measures for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 2.51%)
(a) Earnings per share $enter earnings per share in dollars
(b) Price-earnings ratio enter price-earnings ratio in times times
(c) Payout ratio enter payout ratio in percentages % (d) Times interest earned enter times interest earned times

Answers

Answer:

Earnings per share

= Net income - Preferred dividend

No of common stocks outstanding at the end

= $86,600 - $4,900

37, 100 shares

= $2.20 per share

b. Price-earnings ratio

= Market price per share

Earnings per share

= $14

$2.20

= 6.36

c. Pay-out ratio

= Ordinary dividend paid x 100

Earnings after preferred dividend

= $18,000 x 100

$81,700

= 22.03%

c. Times interest earned

= Earnings before interest and tax

Interest expense

= Net income + Interest expense+ Tax

Interest expense

= $86,600 + $16,700 + $26,400

$16,700

= 7.77 times

Explanation:

Earnings per share equals net income minus preferred dividend divided by number of common stocks outstanding at the end of the year.

Price-earnings ratio is market price price per share divided by earnings per share.

Pay-out ratio is ordinary dividend paid divided by earnings after preferred dividend.

Times interest earned is earnings before interest and tax divided by interest expense. Earnings before interest and tax equals net income plus interest expense plus income tax.

Equipment with a book value of $65,300 and an original cost of $133,000 was sold at a loss of $14,000. Paid $89,000 cash for a new truck. Sold land costing $154,000 for $198,000 cash, yielding a gain of $44,000. Long-term investments in stock were sold for $60,800 cash, yielding a gain of $4,150. Use the above information to determine this company’s cash flows from investing activities. (Amounts to be deducted should be indicated with a minus sign.)

Answers

Answer:

The company’s cash flows from investing activities is $221,100

Explanation:

Cash flow from investing activities:

It records that transactions which is related to the purchase and sale of long term assets. The purchase of fixed assets has outflow of cash so, it is deducted whereas the sale of fixed assets has inflow of cash so, it is added.

The cash flow from investing activities is shown below:

Add : Sale of equipment (Book value - loss) = ($65,300 - $14,000) = $51,300

Less : Purchase of new truck = - $89,000

Add: Sale of land = $198,000

Add: Sale of long term investment = $60,800

So, the cash flow from operating activities :

= $51,300 - $89,000 + $198,000 + $60,800

= $221,100

The other cost is not related to the investing activities. Therefore, it is not considered in the computation part.

Hence, the company’s cash flows from investing activities is $221,100

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