Please show steps/calculations Brubacher Company makes four products in a single

Question

Please show steps/calculations

Brubacher Company makes four products in a single facility. These products have the following unit product costs: Additional data concerning these products are listed below. The grinding machines are potentially the constraint in the production facility. A total of 20,500 minutes are available per month on these machines. Direct labor is a variable cost in this company. Which product make the MOST profitable use of the grinding machines? Product A Product B Product C Product D

Explanation / Answer

a) Total Minutes Require to satisfy the demand A B C D Total Demand 4000 3000 3000 4000 grinding minutes per unit 2.8 1.8 1 0.7 Minutes Required 11200 5400 3000 2800 22400 Total Minutes requires = 9270 b) Production of each product to Maximise the profit A B C D Sales per unit           75.8           77.7           70.8            53.9 Variable Cost per unit Direct materials           17.0           19.3           15.7            15.4 Direct labour           18.4           14.1           16.7            15.5 Variable Manufactring Overhead             4.3             2.8             1.9              1.4 Variable selling exp             1.9             2.1             3.6              3.3 Total Varibale cost           41.6           38.3           37.9            35.6 Contribution per unit           34.2           39.4           32.9            18.3 Less:- Fixed Cost           20.7           22.5           17.9            11.6 Profit per unit           13.5           16.9           15.0              6.7 Contribution % 45.1% 50.7% 46.5% 34.0% Fixed Cost total Exp Units 4000 3000 3000 4000 Total Fixed cost per unit           20.7           22.5           17.9            11.6 Fixed Cost      82,800      67,500      53,700       46,400    250,400 We will make the production on the basis of higher contribution first, then second highest and so on, there fore We use the following method to produce :- First Product B, Then Product C, Then Product A and Then Product D. A B C D Production 4000 3000 3000          1,286 (D balancing unit in available time) Per unit time required 2.8 1.8 1 0.7 Time Avaiable- minutes 12100 20500 15100 900 Time Required- minutes 11200 5400 3000 900 Bal Time- minutes 900 15100 12100 0 A B C D Total Sales units 4000 3000 3000          1,286 Sales Value    303,200    233,100    212,400       69,300    818,000 Less:- Variable Cost    166,400    114,900    113,700       45,771    440,771 Contribution    136,800    118,200      98,700       23,529    377,229 Less:- Fixed Cost    250,400 Net operating income    126,829 9. The most profitable product to use of the grinding machines is Product B. i.e B) Product B

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---