Chef Gourmet, Inc., has assembled the following data pertaining to its two most
ID: 2395702 • Letter: C
Question
Chef Gourmet, Inc., has assembled the following data pertaining to its two most popular products Food Blender Processor Direct material Direct labor Manufacturing overhead $46 per machine hour Cost if purchased from an outside supplier Annual demand (units) S 22 37 29 92 109 24.000 36.000 16 46 64 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $34. Management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers Required 1. If 58,000 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? Blender Processor Manufacture Purchase 2. With all other things constant, if management is able to reduce the direct material for a food processor to $22 per unit, how many units of each product should be manufactured? Purchased? Food Blender Processor Manufacture PurchaseExplanation / Answer
We will produce the blender first
Answer to 1
Answer to 2
Particulars Blender Food Processor Overhead (A) 46.00 92.00 Rate per hour (B) 46.00 46.00 Hours per unit (A/B) 1.00 2.00 Overhead (A) 46.00 92.00 Less: Fixed Overhead at 34 per hour 34.00 68.00 Variable Overhead 12.00 24.00 Purchase Price 64.00 109.00 Less: Direct Material 22.00 37.00 Less: Direct Labor 16.00 29.00 Variable Overhead 12.00 24.00 Contribution 14.00 19.00 Contribution Per Hour 14.00 9.50 Rank I IIRelated Questions
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