Rice Corporation manufactures two styles of lamps—a Bedford Lamp and a Lowell Lamp
The following per unit data are available:
Bedford Lamp Lowell Lamp
Sales price $26 $36
Variable costs $14 $26
Machine hours required for one lamp 4 5
Total fixed costs are $50,000. Machine hour capacity is 25,000 hours per year. Assuming that the company can sell as many products as it can make, which product mix would deliver the highest operating income?
A) 5,000 Bedford Lamps and 6,250 Lowell Lamps
B) 0 Bedford Lamps and 5,000 Lowell Lamps
C) 6,250 Bedford Lamps and 0 Lowell Lamps
D) 6,250 Bedford Lamps and 6,250 Lowell Lamps
C .C)
Bedford Lowell
Sales price $26 $36
Variable costs 14 26
Contribution margin $12 $10
Machine hour per unit 4 5
Contribution margin per machine hour $3 $2
Ranking 1 2
Hours available No. of units
Total 25,000
Bedford 25,000 6,250
Lowell 0 0
You might also like to view...
If the Open-Market Desk at the Fed buys securities when the federal funds rate is below the primary credit discount rate, the most likely effect is that the
A. federal funds rate decreases. B. primary credit discount rate decreases. C. primary credit discount rate increases. D. federal funds rate increases.
The following information is available from the Arugula Company: Actual factory overhead $16,800 Actual fixed overhead expenses $ 9,200 Budgeted fixed overhead expenses $ 9,500 Actual hours 3,600 Budgeted hours 3,800 Standard hours allowed 3,500 Standard variable overhead rate per direct labor hour $ 2.25 Assuming that Arugula uses a three-variance analysis of overhead variances, what is the
efficiency variance? a. $500 unfavorable b. $475 unfavorable c. $975 unfavorable d. $175 unfavorable
Fred Hammond recently invested in a project that has an expected annual cash inflow of $7,000 for 10 years, and an expected payback period of 3.6 years. How much did Fred invest in the project?
a. $19,444 b. $36,000 c. $25,200 d. $40,000
A problem with S-curves is that ______.
a. interpreting them is not always self-evident b. managers do not know how to use them c. they capture little financial or cost information d. they are not audited