costacctg13_sm_ch11

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Unformatted text preview: ept. Constrai nt 0 0 5 10 15 20 22, 0 25 30 35 40 D (batches of Della's Delight) 11­35 We next calculate the optimal production mix using the trial­and­error method. The corner point where the Mixing Dept. and Baking Dept. constraints intersect can be calculated as (18, 8) by so lving: 30D + 15B = 660 (1) Mixing Dept. constraint 10D + 15B = 300 (2) Baking Dept. constraint Subtracting (2) fro m (1), we have 20D = 360 or D = 18 Subst ituting in (2) (10 ´ 18) + 15B = 300 that is, 15B = 300 - 180 = 120 o r B = 8 The corner point where the Filling and Baking Department constraints intersect can be calculated as (3,18) by subst ituting B = 18 (Filling Department constraint) into the Baking Department constraint: 10 D + (15 ´ 18) = 300 10 D = 300 - 270 = 30 D = 3 The feasible regio n, defined by 5 corner po ints, is shaded in So lution Exhibit 11­40. We next use the trial­and­error method to check the contribut ion margins at each of the five corner points of the area of feasible so lutions. Trial 1 2 3 4 5 Corner (D,B) (0,0) (22,0) (18,8) (3,18) (0,18) Total Contribution Margin ($300 ´ 0) + ($250 ´ 0) = $0 ($300 ´ 22) + ($250 ´ 0) = $6,600 ($300 ´ 18) + ($250 ´ 8) = $7,400 ($300 ´ 3) + ($250 ´ 18) = $5,400 ($300 ´ 0) + ($250 ´ 18) = $4,500 The optimal so lut ion that maximizes contribution margin and operating inco me is 18 batches o f Della’s Delights and 8 batches of Bonny’s Bourbons. 11­36 11­41 (30 min.) Make versus buy, ethics. 1. Direct materials per unit = $195,000 ¸ 30,000 = 6.50 Direct manufacturing labor per unit = $120,000 ¸ 30,000 = $4 Variable manufacturing overhead for 30,000 units = 40% of $225,000 = $90,000 Variable manufacturing overhead as a percentage of direct manufacturing labor = $90,000 ¸ $120,000 = 75% Fixed manufacturing overhead = 60% of $225,000 = $135,000 SOLUTION EXHIBIT 11­41A Manufacturing Costs for Manufacturing 32,000 Units Costs for with Porter 30,000 Units Estimates (1) (2) Purchasing costs ($17.30/unit ´ 32,000 units) Direct materials...
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This note was uploaded on 10/11/2010 for the course ACCT 321 taught by Professor Cole during the Spring '10 term at University of Miami.

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