Ch 16 Assignment D Week 6 Problems

Ch 16 Assignment D Week 6

Using Limited Resources

2. Northern Production Company has 200 labor-hours available. There is no limit on machine-hours. Northern can sell all of Y it wants, but it can only sell 45 units and 20 units of X and Z, respectively.

A ) What is the contribution margin per labor-hour for product Y?

B) To maximize profits, how many units of each product should Northern produce?

Outsourcing Decision

3. The Coil Company manufactures 10,000 rolls of cable each period. The cable is used as an input for producing several other products that Coil manufactures. The full manufacturing costs for a batch of 100 rollsof cable are:

The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the cable. These assets have no other use than for the manufacturing of the cable. An outside supplier has offered to sell Coil the 10,000 rolls of cable necessary to meet production needs this period for a lump-sum of $45,000.

If Coil accepts this outside supplier’s offer, how much better or worse off will the company be?

Joint Costs

4. The Kirsten Company uses a joint process to produce products A, B, C, and D. Each product may be sold at its split-off point or processed further. Joint processing costs for a single batch of joint products are $65,000. Other relevant data are as follows:

Calculate the effect on profits of processing Product A further beyond the split-off point.

Allocating Limited Resources

5. A limitation of 3,000 machine-hours per week prevents Manhattan Manufacturing Company from meeting the sales demands for its products. The product information is as follows:

Assuming unlimited demand for each product, determine what is the best short-run profit maximizing strategy?