Blender Mixer Direct material Direct labor 2$ 23 $. 34 16 44 Manufacturing overhead @ $56 per machine hour Cost if purchased from an outside supplier Annual demand (units) 56 112 80 150 39,000 47,000 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $28. Kitchen Magician's management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 82,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? 2. With all other things constant, if management is able to reduce the direct material for a mixer to $23 per unit, how many units of each product should be manufactured? Purchased?

Blender Mixer Direct material Direct labor 2$ 23 $. 34 16 44 Manufacturing overhead @ $56 per machine hour Cost if purchased from an outside supplier Annual demand (units) 56 112 80 150 39,000 47,000 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $28. Kitchen Magician's management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 82,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? 2. With all other things constant, if management is able to reduce the direct material for a mixer to $23 per unit, how many units of each product should be manufactured? Purchased?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4BE: Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and...

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