(Could you please give a detailed step by step calculations for this problem?) T
ID: 2348557 • Letter: #
Question
(Could you please give a detailed step by step calculations for this problem?) Thanks!!!!Additional Processing decision with a Production Constraint. Mega Chemical Company produces ZylexA and a related product called ZylexB. ZylexB. Which sells for $15.00 per gallon, is made from a base of ZylexA plus additional ingredients. It takes 25 minutes to manufacture a gallon of ZylexA and an additional 10 minutes to manufacture a gallon of ZylexB. ZylexA sells for $9.00 per gallon. The cost per gallon of manufacturing ZylexA and the additional costs to convert in into ZylexB are:
ZylexA:
Material $2.00
Labor $2.50
Variable overhead 2.25
Additional Cost to convert ZylexA into ZylexB:
Material $1.75
Labor $0.50
Variable overhead 1.10
Both products have been successful, and demand for both products is strong and beyond the company
Explanation / Answer
Particulars Zylex A Zylex B Sale Price 9 15 Mat. Cost 2 3.75 Lab. Cost 2.5 3 Var. OH 2.25 3.35 Cont. 2.25 4.9 Min Taken 25 35 Cont. per min 0.09 0.14 Therefore B should be produced as its contribution per key factor is greater.
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